In mid-June Elizabeth Arden announced plans to merge with Revlon. And that deal is expected to close within the year. Revlon, by acquiring the outstanding shares of the prestige beauty company, is gaining a portfolio of brands, most notably across prestige skin care and prestige color cosmetics that will expand the company’s presence in the beauty market.
Together Elizabeth Arden and Revlon will save by consolidating similar departments and grow by capitalizing on one another’s strengths. “Cost synergies of approximately $140 million are expected to be achieved through the elimination of duplicative activities,” according to a joint press release issued back in June, which means “leveraging purchasing scale, and optimizing the manufacturing and distribution networks of the combined company.”
Revlon’s CEO and president Fabian Garcia calls the deal “strategically and financially compelling,” as Cosmetics Design reported. In combination, Revlon and Elizabeth Arden “anticipate that they will achieve additional growth opportunities in both sales channels and geographies.”
Quarterly result
In the North American region, Elizabeth Arden’s Q4 net sales were up 2.6% over the same quarter’s sales last year (a figure that equates to a 2.8% increase in constant currency). International segment sales for the prestige beauty company were up only 1.6% for the quarter (or, 4.6% when adjusted to constant currency rates).
Elizabeth Arden’s total net sales for the quarter came in at $192.7m, up 9.8% (or 3.6% in constant currency) over the same quarter last year.
Year-end numbers
For the year, net sales came in at $966.7m, which is down slightly (0.4%) compared to the previous fiscal year. When adjusted to constant currency numbers, the company saw a 0.6% net sales increase. In the region, North American net sales were down 3.6% (2.7% when adjusted).
Summarizing the results, “the Company ended fiscal 2016 by delivering on all of its key metrics, reflecting the impact of the Company’s multi-year operational and cost strategies to deliver consistent constant foreign currency net sales growth for the Elizabeth Arden brand and key fragrance pillars, as well as improving margins and profitability,” as the press release outlining the numbers explains.
Strategic highlights
The company called attention to four strategic initiatives as well: drive the Elizabeth Arden brand, grow the fragrance portfolio, improve go-to-market capability and execution, and optimize costs and reduce complexity to drive gross margin.
Along the way to achieving those goals, Elizabeth Arden is “expanding its ecommerce capabilities and social media activities to drive global demand for the Elizabeth Arden brand.” And the company notes that in fragrance net sales of designer scents were up 5%. Also the White Diamonds and Curve brands did well in Q4.
The company claims gains in its go-to-market capability everywhere, but acknowledges that net sales in Latin America did not increase. To optimize costs, Elizabeth Arden continues to streamline its business, “improve efficiencies,” and refine its product mix.