Kills product line
The company is also discontinuing its baby-boomer-targeted Vital Radiance line, which has been a major sales disappointment.
The cosmetic marketer's new president-CEO, David Kennedy -- tellingly, the former chief financial officer -- is sweeping out 250 jobs, among them several executives from Mr. Stahl's team, notably CMO Stephanie Klein-Peponis; Chief Creative Officer Rochelle Udell; and Revlon Director-Marketing Maura Mottolese. No successors were named; the company said brand managers would report to Mr. Kennedy. A spokeswoman did not return calls for comment by press time.
'We were fat'
According to an executive close to Revlon, the cuts are a part of Mr. Kennedy's strategy to develop a more cost-effective structure. "We were fat in terms of senior-level marketers," the executive said. The team is also likely taking the fall for the failure of a multitude of recent efforts intended to turn the company around, among them the launch of the Vital Radiance brand aimed at older women.
Mr. Kennedy said the company has decided to discontinue the line, taking a negative hit of $110 million, figuring it was unlikely to receive space at Revlon's "best [retail] accounts." Instead of building Vital Radiance, the investment saved will be used to leverage the mainstay Revlon brand, he said.
Despite Revlon spending $17 million in measured media behind Vital Radiance over the last three months, according to data from TNS Media Intelligence, the brand failed to take off at major drug chains including Rite Aid and CVS.
Skeptical of changes
Industry observers met the changes with a healthy skepticism, noting they've seen it many times before with Revlon.
"There have been a lot of management changes at Revlon over the years, lots of different leaders," said Carrie Mellage, industry manager-consumer products at Kline & Co. "It's no secret they've been suffering for over a decade and haven't been profitable for a long time and they're still looking for someone to turn the company around."
Ms. Mellage said Revlon's biggest hurdle is its deep-pocketed competitors, L'Oreal and Procter & Gamble, giants that have "huge marketing budgets and are constantly coming up with new innovation."
Despite the success of a lot of anti-aging products on the market, Ms. Mellage said Revlon failed with Vital Radiance likely by failing to put its Revlon name brand on the line. "There are a lot of competing products out there for boomers to choose from and having the Revlon brand equity associated with it could have helped consumers navigate through the clutter."
In August, the company reported that Vital Radiance sapped $40 million from its operating profit in the second quarter ended June 30. Net loss in the quarter was $87 million.