Revlon Inc.'s new President and CEO Fabian Garcia was upbeat during the firm's May 6 first-quarter earnings call, praising the firm's strategic groundwork in place while suggesting that its flagship Revlon brand still has considerable unlocked potential.

The exec appears to have hit the ground running in his three weeks as head of the New York-based firm, joining April 15 after 13 years at the Colgate-Palmolive Co., where he served most recently as chief operating officer for global innovation and growth ([A#02160425005]).

He was tapped for the slot vacated by former President and CEO Lorenzo Delpani, who helmed the company for just over two years before stepping down for personal reasons. Revlon also recently named Juan Figuereo, most recently executive vice president and CFO of mobile communication services firm NII Holdings, to the role of executive vice president and chief financial officer.

Garcia said he was excited to come on board "during a period of renewed growth and innovation," noting that he was drawn to the industry in which Revlon plays and the strength of its namesake brand.

"I believe the brand is much bigger than its current state," he said. "When you think about what the brand has achieved over time and when you think about how the brand is doing right now, you can see that the brand is turning around."

He praised Delpani for putting a new strategy in place for Revlon that led to positive results in the firm's fiscal 2016 first quarter. Deplani spearheaded a marketing and multimedia campaign in late 2014 constructed around the tagline "Love Is On" ([A#02141201003]).

At the same time, Garcia suggested that more work needs to be done to build on the brand's existing foundation and capture market share. Specifically, he wants to "focus on the heritage of this brand and make sure we continue to drive some of those jewels in the crown."

Additionally, the exec pointed to the firm's hair-coloring business as one that is "underleveraged" with room for growth.

He declined to elaborate so as not to "tip my hand to the competition," but suggested that Revlon hair-coloring products "have a lot more value than we have been able to leverage so far."

Garcia also was cagey about potential divestitures, but said the firm is interested in further expansion to international markets, possibly when currency conditions improve.

According to the new CEO, anticipated product innovations for the next few quarters are "strong" compared with the previous year. Revlon's turnaround focus has been on launching fewer, bigger innovations, a strategy Garcia upheld as key to growth going forward.

For the first quarter, the firm's consumer segment sales decreased 1.3% to $320m, but rose 2.5% excluding currency effects.

Company leadership attributed the increase largely to sales of Revlon ColorSilk hair products, Sinful Colors nail products and Cutex nail-care products plus a bump in Mitchum antiperspirant and deodorant sales thanks to the introduction of a dry spray format.

The gains were partially offset by lower Revlon color cosmetics sales, "mainly as a result of inventory-reduction efforts by certain customers in the US."

Despite the decline, the firm says consumption in the US was strong and helped Revlon color cosmetics gain market share. Specifically, Garcia noted that the brand's new Ultimate All-In-One Mascara "has driven significant growth in the category, and was ranked among the top three selling products in the US this quarter by Nielsen."

For the firm's professional segment, sales were roughly flat at $115.1m, but increased 2.7% excluding currency impacts. Sales were driven by American Crew and Crème of Nature hair-care products.

Overall, Revlon recorded a Q1 profit of $11m, or $0.21 per share, up from a loss of $900,000 in the same period last year.

Analyst Grant Jordan from Wells Fargo asked the execs about weakness in the domestic nail category, a trend [Coty Inc.] noted in its recent earnings report ([A#02160509005]).

Figuereo acknowledged challenges in the segment, particularly with a number of "value brands" entering the market.

"The way we need to look at this is we need to continue to differentiate our brands so that we can gain market share," he said. "We feel good about what we're doing [in the US] this quarter, and we feel good about the innovation we are bringing to market."

A More Transparent Revlon?

During the call, David Diamond, an analyst with Rovita Advisors, asked about Garcia's approach to engaging with investors, noting that during Delpani's tenure, the exec did not meet with investors or present at investor conferences, which may have impacted the company's valuation.

"The company, in the minds of most investors, is a de facto private company with a public listing," Diamond suggested. "Given your background and your experience at Colgate and the anticipation that a lot of us have for you joining, should we expect progress in this area in terms of investor engagement and engaging with Wall Street in a positive way?"

Garcia explained that while he comes from a culture of transparency at Colgate, Revlon is a controlled company with more than three-quarters owned by Chairman Ronald Perelman, and "as such, we have to respect the desires of the shareholders."

"That said, my intention is to be as transparent as I can be and to engage with the stakeholders. That of course includes our investors," he said. "The degree of that engagement and the frequency of that engagement will be different than what perhaps you have experienced more recently because, obviously, we want to all be sure that the company is appropriately valued."

Diamond observed that the call itself "is already a dramatic improvement from the past."

In January, Perelman, who controls 77.6% of Revlon through investment firm MacAndrews & Forbes, said in an SEC filing that he was exploring strategic alternatives for the New York-based firm Also see "In Brief: Revlon Sale?; P&G/Coty Fragrance Transfer; More" - HBW Insight, 22 January, 2016..

Revlon Brand 'Bigger Than Its Current State' – New CEO Garcia

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