Revlon Inc. has worked to turn up the love consumers feel for the brand. Now it’s giving off the vibe that the company is flirting with selling.
The departure of Lorenzo Delpani as Revlon’s President and Chief Executive Officer on March 1, has sparked more chatter that the firm’s owner and chairman, Ronald O. Perelman, Chairman and CEO of MacAndrews & Forbes Incorporated, is looking to sell.
In a regulatory filing in January, Revlon stated that MacAndrews & Forbes would “explore strategic alternatives involving the company” and from time to time expects “to communicate with third parties as well as with the company as to the possibility of such a transaction and related strategic, financial and other matters.”
Several financial observers saw the filing as Ronald’s way to gauge the interest of potential buyers, particularly in the wake of the Coty Inc.-Procter & Gamble Co. deal.
Industry sources said the firm has tapped Deutsche Bank to act as financial adviser on the sale of Almay, and that several strategic buyers were already in talks with the brand.
Lorenzo, for his part, will continue to serve the board and as a paid advisor. But his departure from the corner office leaves Revlon with two vacancies in its management team. Its previous Chief Financial Officer, Roberto Simon, left earlier this year. Revlon’s Gianni Pieraccioni, Executive Vice President and Global President of the Revlon Consumer Division, has assumed the post of Chief Operating Officer and is tasked with running the company until a new CEO is named.
In the past, Ronald has had no qualms about making swift changes to the management team, but Lorenzo said the decision to step down was for personal reasons, and his presence on the board seems to indicate that he and Ronald have strong ties.
Lorenzo joined Revlon through its acquisition of The Colomer Group, where he was CEO and Managing Director. In October 2013, he assumed top post at Revlon Inc., becoming the eighth CEO at the company during the 31 years that Ronald has owned the company.
During Revlon’s year-end earnings call with Wall Street analysts, he said, “I’ve gone through a very intense turnaround in The Colomer Group and then moved to integrating the company here [at Revlon] and we have done a successful job both at integrating and rebuilding momentum at Revlon. I think we have done a good job and I want to take a break and focus on myself and my family and essentially engage in new challenges in the future.”
Lorenzo said that Revlon expects to fill the CEO post “soon.” He also noted that the incoming CEO will likely want a say in selecting the CFO.
The company seems to have found its footing and begun to reap success with its Love Is On marketing campaign, a concept crafted by Lorenzo, who is widely viewed as a marketer with a bold style. His aim was to do more sales with fewer, better products. The company ended the year on a high note. Net sales were $521.9 million in the fourth quarter, up 4.2 percent, or 9.8 percent on a foreign exchange basis. For the full year, net sales were $1.91 billion in 2015, a decline of 1.4 percent, but gained 4.9 percent in constant currency.
But several industry observers pointed out that the company has become very promotional, using aggressive discounts to lift sales and attract a buyer. A recent CVS ad features a “buy one, get one 50 percent off” deal on Revlon cosmetics, excluding foundation, and Almay. It includes similar deals for a number of brands, including NYX, Aveeno and Milani.
Wendy Liebmann, CEO and Chief Shopper at WSL Strategic Retail, notes that Revlon is a formidable presence in the mass-market beauty aisle, and that could well attract a buyer. She added that mass retailers also are busy focusing on their exclusive lines — whether its Boots at Walgreens or Nuance by Salma Hayek at CVS Pharmacy. Further distracting retailers is the Coty-P&G deal, and now talk of a possible Revlon sale. “It feels like a lot of disruption in mass,” said Wendy.
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