Revlon needs more than cosmetic cuts
Revlon has overhauled its executive team as part of a massive cost-cutting drive designed to stem losses, with brand marketing among the hardest hit areas at the company.
Chief marketing officer Stephanie Klein Peponis and chief creative officer Rochell Udell are among the casualties, leaving the remaining team in the hands of new chief executive David Kennedy.
Kennedy is driving through the changes after stepping up from chief financial officer to replace outgoing chief Jack Stahl. Further cuts are set to follow across the company as it moves ahead with plans to trim 8% – 250 staff – from its workforce.
News of the restructure ends a turbulent few months for the struggling company – controlled by financier Ron Perelman – which was recently forced to axe its newest cosmetics line Vital Radiance in the US following poor sales. The brand, comprising a range of more than 100 products targeting older women, was meant to form a key part of Revlon’s turnaround strategy but instead could slice up to $60m (31.6m) from this year’s profits.
While some analysts support the decision to pull the range so quickly, enabling the new management to focus on its core Revlon and Almay brands, others question whether the latest steps to streamline the business, following a previous shake-up in February, goes a step too far.
In a research note released in the wake of the changes, Credit Suisse analyst Filippe Goossens questions whether “senior management may be stretching itself a little too thin”, particularly given the learning curve Kennedy has to contend with. But Goldman Sachs consumer products analyst Kevin Ziets is upbeat about the move, arguing it should free marketing and management resources for ranges with greater growth potential, such as Almay.
Falling behind
Despite some reservations, most experts view the changes as a necessary step towards refocusing the brand. While its rivals have continued to impress with innovative product launches, Revlon has lacked direction, struggling to keep up with well-resourced competitors including L’Or?, and Procter & Gamble-owned Max Factor, as well as direct sellers such as Avon and QVC.
Rita Clifton, chairman at branding consultancy Interbrand, criticises the company for adopting an overly “conservative” approach to marketing, and failing to inject the level of energy and innovation required of a brand leader. “While Revlon has a strong brand name, it doesn’t stack up against its competitive set,” she says.
Don Williams, chief executive of global packaging and branding consultancy Pi Global, is puzzled why consumers would “buy into Revlon over many other cosmetics brands which are carefully targeted, beautifully designed, slickly marketed and have ongoing innovation programmes”.
Management failings
These industry figures attribute the brand’s demise largely to the failures of senior managers. “It’s often difficult for incumbent management to see what is happening and what needs to be done,” Clifton says.
Williams adds that while Revlon has potential, until now its bosses have lacked the vision and drive to propel it forwards.
While the structural foundations have been laid, many challenges lie ahead. If Revlon is to survive, it will need to seriously rethink the brand and what it stands for. Success will hinge largely on the abilities of the new management team to push through the changes required of a business that many feel has lost its way.
