Revlon applies an ugly profit picture
Ronald Perelman's Revlon predicted slower growth in cosmetics sales
and profit this year and delayed a stock sale. The shares plunged 41%,
the biggest decline in more than seven years, and the bonds dropped.
Sales of Vital Radiance and Almay makeup will be less than
anticipated, New York-based Revlon said. The company didn't give
Three analysts surveyed by Thomson Financial forecast $1.45 billion in sales this year.
Revlon had revenue of $1.33 billion last year.
"Revlon was banking on these new products and so far the early
returns suggest they haven't justified the investment," said Jim
Dorment, an analyst with New York-based U.S. Trust Corp., which holds
Revlon shares have lost 92% since Perelman's initial public offering
of the company in 1996. The cosmetics maker said it expects profit to
be at or below 2005 levels.
Revlon has posted eight consecutive years of losses as the company
has been saddled with more than a $1 billion in debt and faced
competition from larger rivals such as L'Oreal and Procter & Gamble.
Shares of Revlon fell $1.13, or 37%, to $1.91. The stock declined less than 1% in the year through Thursday.
The company said it will postpone a $75 million stock sale to later this year or early 2007.
Revlon said it might cut back retail display space for Vital Radiance.
The share decline may reflect investors concern that the company
could go into bankruptcy, said David Abella, an analyst with Rochdale