Cosmetics maker Revlon Inc. reported its first profitable quarter in six years Tuesday, as consumers bought its new products, sending its share price up sharply.
Net profit for the maker of Almay, Ultima and Charlie cosmetics was $46 million, or 12 cents per share, compared with a loss of $12.6 million, or 18 cents a share, a year earlier.
Analysts, on average, expected New York-based Revlon to earn 11 cents per share, according to Reuters Estimates.
“We think the turnaround continues to evolve nicely and that signs of its process should become more visible if Revlon gains share when the March or April data is released,” analysts at Prudential Equity Group said in a research note.
Growth was driven mainly by North America, reflecting the arrival of new products at retail outlets, although it was offset by factors including higher discounts such as an increase in sales incentives.
“We are optimistic about our outlook for 2005 and beyond,” Revlon Chief Executive Jack Stahl said in a statement. But he told a conference call to analysts that the company would not provide any guidance on future results.
“We will continue to aggressively work to improve our margin structure,” Stahl told the call, adding that initiatives which drove 2004 results would be important in creating the resources necessary to step up investment in 2005.
“We must maintain the flexibility to take the right actions at the right time, irrespective of the quarterly impact. We did that in the first quarter of 2005 as we increased our brand support spending behind our new products ... and began advertising earlier than at any time in our recent history,” he said.
Stahl said the early indications were that Revlon’s first wave of new products was off to a good start.
Revlon had been suffering from declining interest in its color cosmetics such as lipstick and eyeshadow, with retailers returning more of its products and its market share shrinking amid fewer new launches.
By contrast, rival manufacturers Avon Products Inc. and Estee Lauder Cos Inc. have posted steady gains in profits and sales.
Revlon said net sales in the fourth quarter rose 3 percent, to $378 million, including a contribution of about 2 percentage points from favorable foreign exchange rates.
In terms of its U.S. performance, Revlon said quarterly market share for the Revlon and Almay brands combined totaled 20.8 percent, compared with 21.2 percent in 2003, according to data from ACNielsen.
