REVLON

Revlon was founded in the midst of the Great Depression, 1932, by Charles Revson
and his brother Joseph, along with a chemist, Charles Lachman, who contributed
the "L" in the REVLON name.

Starting with a single product — a new type of nail enamel — the three founders pooled
their resources and developed a unique manufacturing process. Using pigments instead
of dyes, Revlon developed a variety of new shades of opaque nail enamel. In 1937,
Revlon started selling the polishes in department stores and drug stores. In six years the
company became a multimillion dollar organization. By 1940, Revlon offered an entire
manicure line, and added lipstick to the collection. During World War II Revlon created
makeup and related products for the U.S. Army, which was honored in 1944 with the
Army-Navy ‘E’ Award for Excellence.

By the end of the war, Revlon listed itself as one of America's top five cosmetic
houses. Expanding its capabilities, the company bought Graef & Schmidt, a cutlery
manufacturer seized by the government in 1943 because of German business ties.
This acquisition made it possible for Revlon to produce its own manicure and pedicure
instruments, instead of buying them from outside supply sources.

Up until the 1940s, Revlon's magazine ads were drawn by hand and mostly in black and
white. Beginning in 1945, Revlon began launching full-color photographic
advertisements in major magazines and stores across the country. Revlon introduced
matching nail polish and lipsticks with exotic and unique names. These ads were taken
by the top fashion photographers of the day including Richard Avedon, Cecil
Beaton, and John Rawlings. Some of these ads were for "Paint the Town Pink" and
1945's "Fatal Apple" with Dorian Leigh. In 1947 Revlon introduced "Bachelor's
Carnation" and in 1948, "Sweet Talk".

In 1950, Revlon introduced a red lipstick and nail enamel called "Where's the Fire?"
Revlon used the word "fire" again later in their "Fire and Ice" ads.

One of the world's first supermodels, Dorian Leigh, starred in some of Revlon's most
memorable advertisements of all time. In 1946, Dorian was covered in purple flowers
and wrapped in a pale purple sheet for "Ultra Violet." In 1947, Dorian appeared in
"Fashion Plate." In 1953, at the age of 36, she appeared in "Cherries in the Snow." Later
that year she appeared in the legendary "Fire and Ice" ad shot by Richard Avedon.

The company had begun to market its products overseas at the end of the 1950s. By
1962, when Revlon debuted in Japan, there were subsidiaries in France, Italy,
Argentina, Mexico, and Asia. Revlon's entrance into the Japanese market was
typical of its international sales strategy. Instead of adapting its ads and using
Japanese models, Revlon chose to use its basic U.S. advertising and models. Japanese
women loved the American look, and the success of this bold approach was reflected in
the 1962 sales figures, which were almost $164 million.

In 1973, Revlon introduced Charlie, a fragrance designed for the working woman's
budget. Geared to the under-30 market, Charlie model Shelley Hack in Ralph Lauren
clothes, personified the independent woman of the 1970s. This is the first perfume ad to
feature a woman wearing pants. Charlie was an instant success, helping to raise Revlon's
net sales figures to $506 million for 1973 and to almost $606 million the following year.
Shelley Hack appeared on Oprah in 2007 to talk about the power of these Charlie print
and commercial ads. Their follow-up fragrance, Jontue, quickly became the number two
best seller.

By the mid-1980s, Revlon's health-care companies, rather than Revlon's beauty concerns,
were innovating and expanding. Reluctant to initiate beauty-product development,
Revlon lost ground to Estée Lauder. Lauder was a privately held company whose
marketing strategy of high prices with accompanying gifts, were featured in upscale
department stores, not drugstores where Revlon was found. Estee Lauder's "high-class"
ads also featured only one supermodel, Paulina Porizkova, shot by famous Chicago
fashion photographer, Victor Skrebneski. This caused Revlon's share to drop from 20
percent to 10 percent of department store cosmetics sales.

On November 5, 1985, at a price of $58 per share, totaling $2.7 billion, Revlon was sold
to Pantry Pride (later renamed to Revlon Group, Inc.), a subsidiary of Ronald Perelman's
MacAndrews & Forbes Holdings. The highly leveraged buyout--engineered with the
help of junk bond king Michael P. Milken--saddled Revlon with a huge $2.9 billion debt
load, which became an albatross around the company's neck for years to come. Pantry
Pride Inc. offered to buy any or all of Revlon's 38.2 million outstanding shares for $47.5
a share when its street price stood at $45 a share. Initially rejected, he repeatedly raised
his offer until it reached $53 a share while fighting Revlon's management every step of
the way. Forstmann Little & Company swooped in at $56 a share, a brief public bidding
war ensued, and Perelman triumphed with an offer of $58 a share. Perelman paid $1.8
billion to Revlon's shareholders, but he also paid $900 million of other costs associated
with the purchase. Perelman had Revlon sell four divisions: two for $1 billion, the vision
care division for $574 million, and the National Health Laboratories division which
became a publicly owned corporation in 1988. Additional make-up lines were purchased
for Revlon: Max Factor in 1987 and Betrix in 1989, later sold to Procter & Gamble in
1991.

Despite the enormously successful campaigns of the 1980s and 1990s featuring
models, Revlon decided to drop almost all fashion models and to instead focus on
female movie stars. Their ads featured a number of different actresses including
Kate Bosworth, Jaime King, Halle Berry (she has appeared in dozens of Revlon ads
since 1996), Susan Sarandon, Melanie Griffith, Julianne Moore, Eva Mendes,
Jessica Alba, Jennifer Connelly, Beau Garrett, and Jessica Biel.
VISION STATEMENT
To satisfy the needs of their customers with glamour and excitement that they provide at
an affordable price.

MISSION STATEMENT
To emerge as the leader in cosmetic and personal care throughout the world. Revlon
takes pride in manufacturing the top skin care and strives to please young and older
woman alike.

MISSION STATEMENT MATRIX

COMPONENTS
Customers Yes
Products/ Services Yes
Markets Yes
Concern For Survival, ----
Growth, Profitability
Technology ----
Philosophy ----
Self-Concept Yes
Concern for Public Yes
image
Concern for ----
employees
SWOT MATRIX

STRENGTHS WEAKNESSES

 High R&D (Revlon spent more  Overleveraged financial position

than $25million on research that
help women.)
 Social responsible (The
Company supports New York
women in Film and also
supports Women Cancer
Research Program.)
 Revlon’s Products can be sold
through its websites
 Low Market share
 Usage of the product is time
limited
 Some products are not skin
friendly
 Not proper marketing in other
countries

 Advertising (Revlon spent

$120million on US advertising
in 2006.)

 The company’s plant have ISO-

9000 certification whish slows
this commitment to quality
manufacturing standards

OPPORTINITUES THREATS

 Aging population in America  Competition

 Innovation in products  Exchange rate fluctuations
 Product and services expansion  Price wars
 Emerging markets and expansion
abroad  Lower cost competitors or imports

 Online  Product substitution

THE INTERNAL ASSESMENT (IFE)

Key Internal Weight Rating Weighted score

factors
Strengths
High R&D 0.15 4 0.60
(Revlon spent more than
$25million on research that
help women.)
Social responsible 0.10 4 0.40
(The company supports
New York women in Film
and also supports Women
Cancer Research Program.)
Revlon’s Products can 0.10 3 0.30
be sold through its
websites
Advertising 0.10 3 0.30
(Revlon spent $120million
on US advertising in 2006.)
The company’s plant 0.10 4 0.40
have ISO-9000
certification whish
slows this
commitment to
quality manufacturing
standards
Weaknesses
Overleveraged 0.10 2 0.20
financial position
Low Market share 0.10 1 0.10
Usage of the product 0.05 2 0.10
is time limited
Some products are not 0.10 2 0.20
skin friendly
Not proper marketing 0.10 1 0.10
in other countries
Total 1.00 2.70
THE EXTERNAL ASSESMENT (EFE)

Key external Weight Rating Weighted score

factors
Opportunities
Aging population in 0.10 3 0.30
America
Innovation in 0.10 4 0.40
products
Product and services 0.12 2 0.24
expansion
Emerging markets 0.10 3 0.30
and expansion abroad
Online 0.10 4 0.40
Threats
Competition 0.15 4 0.60
Exchange rate 0.05 2 0.10
fluctuations
Price wars 0.10 3 0.30

Lower cost 0.10 3 0.30

competitors or
imports
Product substitution 0.08 4 0.32
Total 1.00 3.26
COMPETITIVE PROFILE MATRIX (CPM)

Revlon L’Oreal Avon

CSF’s Wt Rating Wt’d Rating Wt’d Rating Wt’d
score score score
Market share 0.15 3 0.45 3 0.45 4 0.60
Inventory 0.05 2 0.10 2 0.10 3 0.15
system
Financial 0.10 3 0.30 3 0.30 4 0.40
position
Cons loyalty 0.10 3 0.30 3 0.30 3 0.30
Sale district 0.10 3 0.30 3 0.30 4 0.40
Global 0.10 2 0.20 3 0.30 4 0.40
expansion
Org structure 0.10 3 0.30 3 0.30 3 0.30
Prod. Capacity 0.10 3 0.30 3 0.30 3 0.30
Price 0.10 4 0.40 4 0.40 4 0.40
competitive
Mgt.experience 0.10 3 0.30 3 0.30 3 0.30
Total 1.00 2.95 3.05 3.55

According to the above CPM we can conclude that Avon is the market leader among all
the competitors. Therefore Revlon should change their strategy to compete the other
cosmetics company.
FINANCIAL RATIOS

2006
2005

LIQUIDITY RATIOS
Current ratio 1.29 1.26
Quick ratio 0.80 0.80

LEVERAGE RATIOS
Debt-to-total asset ratio 2.02 1.81
Long term debt-to-equity ratio 2.71 2.47
Coverage ratio 0.34 0.50

ACTIVITY RATIOS
Fixed Assets turnover ratio 2.99 2.95
Total Assets turnover 1.43 1.28

PROFITABILITY RATIOS
Gross Profit Margin 59% 62%
Net Profit Margin -19.35% -6.28%
Return on Total Assets -0.27 -0.801
Return on Total Equity 0.204 0.076
Earning Per share (EPS) -5.96 -2.22

GROWTH RATIOS
Sales 1,298.7 1,332.3
Net income -251.3 -83.7
EPS -6.04 -2.24
Dividends per share ---- ----
ANALYSIS
The above ratios showing the overall position of the Revlon, Inc. The company is not in
good position in 2006 and 2205. But as compare to 2005 it showing bit better result.
Ideal current ratio for any firm should be 2 but the Revlon showing bad position in 2005
and 2006.
Revlon's color cosmetics market share has been dropping since 1998, and the company
has had only a single profitable quarter in the last 8 years. The company's profitability
began to suffer in the late 90s when overall industry growth in color cosmetics sales to
mass retailers began to decline and increasing competition and drugstore consolidation
resulted in reduced shelf space for Revlon's products. Since then, Revlon has struggled to
keep up with major competitors as its slowing sales and large debt burden have
constricted its ability to spend on either R&D or an effective turnaround strategy. Revlon
spent $24.4M on R&D in 2007, compared to $666M for L’Oreal (LRLCY) in 2007.
Revlon had revenues of $1.4B and long term debt of $1.4B in 2007.
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