Revlon sales up on back of higher advertising spend

By Katie Bird

- Last updated on GMT

Related tags Generally accepted accounting principles Revenue Revlon

Cosmetics company Revlon recorded strong sales increases for the first quarter of 2011 although operating income fell due to higher advertising spend.

The New York-based company reported net sales of $332.2m for the period ending March 31 2011, an increase of 9.1 percent on 2010’s first quarter figures. However, discounting the favorable foreign currency fluctuations sales were up 7 percent on previous year figures.

According to the company, the strong sales were mainly led by the Revlon color cosmetics and Almay color cosmetics brands, whereas the Revlon ColorSilk hair color brand suffered lower sales compared to previous year figures.

Commenting on this year’s results, CEO Alan T. Ennis said that results reflected the business strategy and Revlon’s focus on driving growth. In addition, he referenced the recent acquisition of the Sinful Colors brand: “Net sales increased 9% year-over-year; we delivered net sales growth in all regions; and, we added the Sinful Colors brands to our portfolio in March 2011.”

Operating income down due to higher advertising spend

While strong sales helped drive operating income, this was dragged down by higher sales costs, the company said.

Operating income was $44.7m during the quarter in comparison to the $45.4m recorded last year, which the company said was mainly due to an increased advertising spend compared to 2010’s first quarter.

However, net income was significantly up on last year’s figures, coming in at $10.4m compared to $2.2m the previous year.

This significant increase is related to the $9.7m of credit refinancing expenses that Revlon experienced early in 2010.

Latin America leads in year-on-year growth

Regarding the company’s geographic performance, it was the Latin American region that experienced the highest growth in sales compared to 2010’s first quarter, with a 34.5 percent increase, discounting favourable currency effects. In addition, this was one region where the company said the Revlon ColorSilk hair color products performed well.

The UK and South Africa were highlighted as strong markets for the Europe, the Middle East and Africa region, which overall experienced an 11.2 percent increase on 2010 first quarter sales.

In the US, which accounts for over half of the company’s sales, sales were up 3.2 percent when compared to last year. Here the company said its hair color range dragged result down, and lower discounting on Revlon color cosmetics was highlighted as boosting results.

Driving the company to act globally was underlined as part of Revlon’s business strategy, along with building strong brands, increase operating profit and improving capital structure.

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