US cosmetics major Revlon exits China; slashes 1,100 jobs
02 Jan 2014
US cosmetics and personal care company Revlon Inc has decided to cease its Chinese operations as the company is realigning its struggling businesses.
''Company was implementing restructuring actions that will include exiting its operations in China, which operations represent approximately 2 per cent of total company net sales, as well as implementing other immaterial restructuring actions that are expected to generate other operating efficiencies,'' Revlon said in a filing with the US Securities and Exchange Commission.
The move will cost around 1,100 positions, mostly in China, including 940 beauty advisors.
The company said that the restructuring actions are unrelated to its recent acquisition of Spanish beauty care company The Colomer Group.
The cosmetics major has acquired Colomer in October from CVC Capital Partners, for $660 million, to augment its supplies to more-profitable salon sector. (See: Cosmetics giant Revlon to buy Spain's Colomer Group for $660 mn)
Revlon said the restructuring will result in approximately $22 million of pre-tax charges, including $10 million in employee related costs and $12 million in inventory write-offs.
The restructuring is expected to generate annual cost savings of approximately $11 million, with about 8 million anticipated in 2014 results.
Revlon has been acquiring new brands and introducing new products to improve its business like rivals Procter & Gamble and Unilever, as sales in some of its larger brands have been slowing down.
New York-based Revlon is a global cosmetics, hair colour, skin care, and beauty care products company. Its prominent brands include Almay color cosmetics, Revlon ColorSilk, Charlie fragrances, Ultima II and Gatineau skincare as well as Colomer's top hair care and nail polish brands.
For the third quarter, Revlon reported a 2.2-per cent decline in net sales at $339 million compared to last year. Net income for the period was $9.5 million against a net loss of $15 million.
In November, the company's interim chief executive officer David Kennedy was replaced by Colomer chief Lorenzo Delpani, as the company continued its restructuring and focus on building brands through innovative, high quality products and effective brand communication, and advertising.
