A new and improved foundation

Stahl & Co. turn in 16% surge in profit with revolutionary formula: listening to consumers

By Published on .

Wondering how jack stahl managed a stunning turnaround at Revlon? He rooted through women's drawers-dresser drawers, that is.

The Revlon president-CEO and his team, central among them exec VP-chief creative officer Rochelle Udell, put color back into the cosmetics marketer with a simple formula: listening closely to the needs of its two biggest constituencies- retailers and consumers-and giving them the products and attention they wanted.

In the process, Mr. Stahl, Ms. Udell and exec VP-chief marketing officer Stephanie Klein-Peponis got about as close to the consumer as they could, going "into women's homes and into their drawers to determine how they felt about the brands, the beauty category, what they used, how they shop and how much time they spent at the [cosmetics] wall" at retail, Ms. Udell said. "When you acknowledge what people want, it's a powerful mechanism."

Powerful enough to propel Revlon's fourth-quarter sales up 16% to $438 million and set profits surging 39% in the period. Along the way to its first profitable quarter in six years (achieved last March), its journey has been fraught with changes, among them a revolving door of four CMOs, three CEOs and multiple agencies, the most recent named last year. And it still has a way to go: Losses in fiscal 2005 totaled $84 million, down from $143 million in 2004. But observers said the once-troubled marketer finally seems to be on track.

"This is Revlon's year," said Nancy Berger-Cardone, VP-Publisher of Allure magazine. "They get it and they're headed in the right direction."

Bill Chappel, analyst at SunTrust Robinson Humphrey, said Revlon is definitely on track to reach its goals of 12% operating margins by 2008.

The insights Revlon reaped from consumers directly resulted in a slew of new products and reformulations of existing ones. Revlon has already this year brought to stores the restage of its Almay line; the launch of the Vital Radiance portfolio for the 50-plus set; the relaunch of Revlon ColorStay; the introduction of Revlon Custom Effects hair color; and the renovation of the Revlon beauty tools lineup, now more ergonomic. Those efforts, together with 2005's return to advertising for Mitchum after a 17-year hiatus and this year's launches of Mitchum Sensitive Skin and a prestige fragrance dubbed Flair, were all developed from feedback with consumers and retailers.

Consistency

Ad spending will rise well over last year's $124 million. But more importantly, Revlon is taking care to maintain a consistency between its ads-now split between Publicis Groupe's Kaplan Thaler Group and Omnicom Group's Arnell, both New York-and in-store presence. "A year ago, you wouldn't have the same [model's] face from the advertising on in-store displays," Ms. Udell said.

Allure's Ms. Berger-Cardone said Revlon-its largest advertiser-has roughly doubled its ad spending in the beauty publication for the first half of 2006. And those ads, she said, are part of totally integrated efforts that "really resonate through all their points of contact."

Retailers responded by allotting the marketer 23% more shelf space in the fourth quarter of last year. Mr. Chappell said Revlon ranked a "D" on Target's A to D vendor rating system when Mr. Stahl arrived, and now it's at an A.
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