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Revlon SWOT & PESTLE Analysis

ID : 52404653| Jun 2018| 17 pages

COMPANY PROFILE -Revlon Inc.

Business Sector :Beauty & Personal Care

Operating Geography :North America

About Revlon Inc. :

Revlon, Inc. which includes Revlon and all its subsidiaries was founded 85 years ago by Charles Revson. MacAndrews & Forbes Inc., owned by Ronald O. Perelman, owns an indirect majority in Revlon. All its business is conducted by its directly owned subsidiary, Revlon Consumers Product Corporation. Revlon operates in four segments namely, Consumer division, Professional division, recently acquired Elizabeth Arden and the other segment. All the segments deal with products for personal care, beauty & cosmetics. The company carries an iconic portfolio of brands in all of its four product segments some of which are, Revlon, Almay, SinfulColors, Pure Ice in cosmetics, American crew in men grooming products, Elizabeth Arden Ceramide along with many other brands in skin care and some other brands which came under its umbrella after CBB acquisition. It has 4 R&D laboratories, 6 factories, 10 distribution houses and produces more than 860 million units of products globally in a year.

Revlon vision is “Glamour, Excitement and Innovation through high-quality products at affordable prices.”

Revlon Inc. Revenue :


US $2,693.7 million – FY ending December 31st 2017 (year-on-year increase of 15.4%)
US $2,334.0 million – FY ending December 31st 2016

Competitive Analysis of Revlon Inc.

SWOT
PESTLE
The SWOT analysis for Revlon Inc. is presented below:
Strengths
Weaknesses
1. A brand centric operating structure with rich expertise in the beauty sector
2. Iconic portfolio of brands and their global reach via strong distribution network
3. Strong code of ethics and working towards sustainability
4. Industry leader in Research & Development
1. Weak Digital Presence
2. Debt Heavy Capital Structure
Opportunities
Threats
1. Geographic Expansion in emerging markets
2. Product line extension in Male grooming category
3. Starting a new product line in the natural category
1. Strong Competition from Big brands like Estee Lauder, L’Oréal and others
2. Decrease in consumer spending for beauty products
SWOT & PESTLE (combined)
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Detailed SWOT Analysis of Revlon Inc.

 

Strength

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Weakness

1. Weak Digital Presence: In spite of adopting Amazon as its e-commerce partner, only 5-6 % of its sales come from online channels. COO Chris Peterson says that although the company had a 32% YOY digital growth but it has not yet realized the benefits of its investments in these channels. It is still trying to enhance the customer engagements through social media etc., where its competitors like L’Oréal have moved way forward. The company is trying to make its online experience seamless by helping the customers to buy its products easily but the results are yet to be seen. L’Oréal recently acquired the virtual makeover app ModiFace to increase its digital experience and give a virtual makeup experience for the consumers whereas Revlon has no such presence to fight against it. Revlon has taken various initiatives for digital marketing, but to attract the current generation, who have made their world around their handset, it still needs to work hard and develop mobile marketing campaigns through apps and other media.

2. Debt Heavy Capital Structure: Acquisition of Elizabeth Arden in 2016 cost the company a cash purchase price of $1034.3 million, for which it entered into a 7 year $1800 million senior secured term facility which has made its balance sheet debt heavy. It could and may have also affected the company's operations & flexibility adversely as the company has to use its cash equivalents to service the debt. Company's total indebtedness was $2756.8 million as of December 31, 2016 which has increased its investment risk substantially. It carries the risk of not being able to make regular payments of principal & interest due to its insufficient profits and cash flows. It may be also at a competitive disadvantage in comparison to its competitors who have less debt. Also after the acquisition, the company has still not declared profits which further makes it weak compared to its competitors like Estee Lauder, L’Oréal, etc.

Opportunity

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Threat

1. Strong Competition from Big brands like Estee Lauder, L’Oréal and others: Increase in competition from various competitors like L’Oréal, P&G, Avon Products, Inc., Mary Kay Inc., Estee Lauder etc., can adversely affect company's business operations, future prospects, financial health and cash flows required for investments. Most of its competitors have deep pockets and global presence well before its entry into those markets, which may force the company on aggressive spending on acquisition, research & development. Also over the years, the company has seen a decline in sales of products from color cosmetic category in the U.S. and may lose further in terms of market share to its competitors. If it wants to increase or maintain the current sales of these products, it has to increase its promotional activities and be more flexible towards its pricing strategy. A major shift in pay levels in china and other nations to almost $15 an hour may also influence expenses for the company. Despite of taking various technological initiatives, Revlon is yet to match its competitors which may lead to a medium or long term threat.

2. Decrease in consumer spending for beauty products: Purchasing habits of consumers are changing due to various reasons one of which is deteriorating economic conditions for a large section of consumer base. Independent brands are becoming more popular and using celebrities for marketing campaigns may be not producing sufficient fruitful results as consumers are getting more influenced by their friends, family and colleagues which Revlon is not able to cope up with. As most of its sales come from foreign countries, adverse change in the currency exchange rate and government mandated pricing control in some countries is also affecting the business in a negative way. Channels through which consumers are making purchases is also changing and moving towards e-commerce sites which the company has been to exploit only partially. It has a small number of brands catering to cosmetic and beauty needs of men which is evolving and gaining momentum. Due to changing needs and behaviour of consumers, Revlon has more cash requirements for promotional activities etc. which it is not able to meet due to recent acquisition of Elizabeth Arden.

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References used in Revlon Inc. Analysis Report

1. Revlon, Inc. Annual report

http://phx.corporate-ir.net/phoenix.zhtml?c=81595&p=irol-reportsannual

2. Revlon, Inc. Press release 2018

http://phx.corporate-ir.net/phoenix.zhtml?c=81595&p=irol-news&nyo=0

3. https://martinroll.com/resources/articles/strategy/the-asian-beauty-industry-new-challenges-and-opportunities/

Copyrights and Disclaimer

Revlon Inc. SWOT and PESTLE analysis has been conducted by Aditya Kumar Gautam and reviewed by senior analysts from Barakaat Consulting.

Copyright of Revlon Inc. SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

Revlon SWOT & PESTLE Analysis
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