What To Expect From Revlon’s Q1

Revlon (NYSE: REV) is slated to release its Q1 earning on May 4. The company will be eager to see a breakthrough in its results following a lukewarm performance over the last few quarters. With the new initiatives in the second half of 2017, we expect the company to show some improvement in its upcoming results. Revlon has been doing better in its international markets than in the North American market of late, with its international growth primarily being driven by double digit growth in Asia and Latin America. Revlon’s Elizabeth Arden brand has also been performing well, with new launches and a strong digital presence.

For full year 2017 as well, the inclusion of the Elizabeth Arden segment increased the company’s net sales by 15.4% y-o-y to $2,693.7 million. Revlon’s Elizabeth Arden brand has performed well this last year driven by new launches and a strong digital presence. Driven by the acquisition of Elizabeth Arden, Revlon is on track to attain integration synergies of $190 million by 2020, with delivering $69 million of synergies and cost reductions for the year ended December 31, 2017.

Also with the recent inductions made in Revlon’s top management the company is positive that the new changes will steer Revlon towards the path of growth in Q1 and beyond. Please refer to our dashboard analysis on Revlon.

Below we discuss key focus areas that will likely aid Revlon’s upcoming Q1 earnings:

International Markets to boost sales – Revlon’s international business is likely to be one of the main driving factors for its business in the future. In the last quarter, total International Sales of the company saw a y-o-y increase of 7.9% in Q4 driven by Elizabeth Arden and Professional segments. Driven by this growth in international sales, the company’s share of revenue from the U.S. market has been gradually declining. Consumers in the region have shifted loyalties to specialty beauty retailers or online purchases. However, the importance of this market for its business, despite the negative trends, is not lost on Revlon.  The international business, on the other hand is seeing major growth from the Asia Pacific region and will continue to gain in 2018.

Digital / Online Focus – Given the importance of digital progress and social media in a brand’s reach and popularity among its clientele (especially the younger ones), Revlon is getting more aggressive in digital and e-commerce initiatives by setting up a new team of digital professionals.  Along with increasing ad investments, the company is also shifting most of its campaigns to the digital platform.  Revlon collaborated with a leading digital consultancy, Sapient Razorfish, to create a stronger digital presence. These factors are positively working in its favor as an increasing number of customers are buying beauty products online.

Overall, we expect Revlon to post improving results in its upcoming earnings.

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