Revlon has changed the complexion of its 1999 marketing with cuts in print advertising.
Several publishers said the cosmetics marketer has cut back its spending plans in magazines by as much as 25% across the board, a reaction to a sales and profit slump that started in mid-1998.
A Revlon spokeswoman declined comment on media plan specifics, but said spending is rising; executives of Revlon's in-house agency, Tarlow Advertising, New York, wouldn't comment.
Revlon spent approximately $101 million in advertising during the first 11 months of 1998, according to Competitive Media Reporting. Of that, $63 million was for TV and $36 million was in magazines.
Revlon's management is likely questioning media strategy in light of its losses, said an industry consultant and former beauty-care products executive.
The makeup market has become even more competitive lately, she said, as upscale customers are lured by new "makeup artist" brands such as Bobbie Brown and MAC, while the mass market is flooded with new entries from everyone from Neutrogena to Victoria's Secret.
Revlon is second to Procter & Gamble Co.'s Cover Girl in the $927 million facial cosmetics category, with 20.8% of the market compared to Cover Girl's 33.3%, according to figures from Information Resources Inc. The introduction of ColorStay makeup in 1995 helped Revlon increase its share from 16% to 21.2% in 1997, but it lost steam last year.
Revlon has lost its innovative edge, according to industry consultants, who say it has not produced another breakthrough to match ColorStay while other companies flood the market with new products.
Growth in Revlon's total ad and promotion spending has slowed, from a 29.6% increase in 1996 to a 6.4% increase in 1998, said a recent report by PaineWebber analyst Andrew Shore, and it's expected to remain flat at $423 million for 1999.
Revlon's net sales rose only 0.6% in 1998, to $2.25 billion, from 1997. The company blamed that on economic weakness overseas and domestic retailers' inventory consolidations.
Many Wall Street analysts downgraded Revlon's stock in late 1998, after a dismal third-quarter report. On March 9, Morgan Stanley Dean Witter & Co. delivered a neutral rating.
Analyst Catherine Lewis' research note projected Revlon's stock will post earnings of $1.43 per share in 1999 from $0.17 in 1998, and sales should rise as it introduces new products and expands distribution of its Ultima II brand in drugstores. But she added the company has not reached a "turning point" yet that would hint its slump is over.
Contributing: Ann Marie Kerwin.
Copyright March 1999, Crain Communications Inc.