News / Economy

Cosmetics Maker Revlon to Exit China

FILE - Cosmetics on display made by Revlon, which has announced it plans to leave China and cut 1,100 jobs as part of a cost-cutting measure.
FILE - Cosmetics on display made by Revlon, which has announced it plans to leave China and cut 1,100 jobs as part of a cost-cutting measure.
Revlon Inc. said it would exit China, where sales of its cosmetics have been falling, and cut more than 1,000 jobs as part of a restructuring designed to save about $11 million a year.
Revlon, owner of the Almay cosmetics brand and Sinful Colors nail polish, said in a filing that its Chinese operations accounted for about 2 percent of total net sales. The company posted net sales of $1.43 billion in 2012.
Revlon said it would cut 1,100 positions, primarily in China, including 940 beauty advisers retained through a third-party agency. Revlon had 5,100 employees as of Dec. 31, 2012.
The company's shares, which have risen nearly 70 percent this year, fell marginally on the New York Stock Exchange.
The Chinese market is full of potential for Western brands. The Chinese cosmetics market more than doubled in size between 2008 and 2012 to $22.8 billion, according to a report in March by Fung Group that cited the National Bureau of Statistics in China.
That has been a boon for companies such as high-end beauty products maker Estee Lauder Companies Inc., whose sales in Asia last quarter rose 7 percent, helped mostly by China, where Estee Lauder has expanded to second-tier cities more quickly than many other Western beauty brands.
Other, non-beauty, U.S. companies to see fast growth in China include handbag maker Coach Inc. and Tiffany & Co.
Falling China sales
But China is also a complex market that can bedevil foreign companies.
Avon Products Inc., a direct seller of cosmetics, saw sales fall 24 percent in 2012 in China, where its reputation has been hit by a bribery probe, and where it has struggled to adapt to selling through retail stores.
Revlon's sales in China declined in 2012, a trend that continued into the first half of this year. The company, which entered the market in 1996, has attributed the fall to declining consumption linked to a slowdown in Chinese economic growth.
“We made a holistic assessment of the opportunity in China versus the cost of doing business there, and we concluded that it made the most sense to exit the market,” Revlon spokeswoman Elise Garofalo said.
According to the National Bureau of Statistics of China, total retail sales of cosmetics grew 13.2 percent in the January-November period, compared with growth of 17 percent in the whole of 2012.
Some cosmetics companies operating in China have also faced pressure from animal rights groups, as the country requires companies to test beauty products on animals.
The China Food and Drug Administration said in November it was considering a rule change that would allow the sale of some cosmetics without requiring them to be tested on animals.
Revlon, owned by buyout titan Ronald Perelman, expects to incur about $22 million of pre-tax restructuring and related charges.
About $10 million of the charges will be employee-related costs, with the rest from sales markdowns and inventory write-offs, the company said on Tuesday.
Revlon said it recorded $20.9 million of the charges in December 2013, with the rest expected during 2014.
The company said about $8 million of the annual savings are expected to benefit 2014 results.
The company's shares were down 0.2 percent at $24.50 in afternoon trading.

You May Like

At International AIDS Conference One Goal, Many Paths

The 12,000 delegates attending 20th International AIDS Conference in Melbourne have vastly different visions about how to eradicate disease More

Disasters May Doom Malaysia’s Flag Carrier

Even before loss of two jets loaded with passengers on international flights, company had been operating in red for three years, accumulating deficit of $1.3 billion More

Afghan Presidential Vote Audit Continues Despite Glitches

Process has been marred by walkouts by representatives of two competing candidates, Abdullah Abdullah and Ashraf Ghani More

This forum has been closed.
Comment Sorting
by: Ashley James from: Washington
January 03, 2014 5:31 AM
Investors have welcomed this move as Revlon will save $8 million in 2014, after which it will save $11 million a year

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Nature of Space Exploration Enters New Agei
Elizabeth Lee
July 20, 2014 2:36 AM
Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.

Video Chicago’s Argonne Lab Developing Battery of the Future

In 2012, the U.S. Department of Energy’s Office of Science awarded a $120 million grant to a new technology center focused on battery development - headquartered at Argonne National Laboratory in suburban Chicago, Illinois. As VOA’s Kane Farabaugh reports, there scientists are making the next technological breakthroughs in energy storage.

Video In NW Pakistan, Army Offensive Causes Massive Number of Displaced

Pakistan’s army offensive in North Waziristan has resulted in the large-scale displacement of the local population. VOA's Ayaz Gul reports from northwest Pakistan where authorities say around 80 percent of the estimated 1 million internally displaced persons [IDPs] have settled in Bannu district, while much of the remaining 20 percent are scattered in nearby cities.

Video Kurdish Peshmerga Force Secures Kirkuk, Its Oil

The Kurdistan regional government has sent its Peshmerga troops into the adjacent province of Kirkuk to drive out insurgents, and to secure the area's rich oil fields. By doing this, the regional government has added a fourth province to the three it officially controls. The oil also provides revenue that could make an independent Kurdistan economically strong. VOA’s Jeffrey Young went out with the Peshmerga and filed this report.

Video Malaysia Reeling: Second Air Disaster in Four Months

Malaysia is reeling from the second air disaster in four months involving the country’s flag carrier. Flight 340 vanished in March and despite an extensive search, no debris has been found. And on Thursday, Flight 17, likely hit by a surface-to-air missile, came apart over eastern Ukraine. The two incidents together have left more than 500 people dead. VOA Correspondent Steve Herman reports from Kuala Lumpur.

Video Diplomatic Crisis Grows Over MH17 Plane Crash

The Malaysia Airlines crash in eastern Ukraine is drawing reaction from leaders around the world. With suspicions growing that a surface-to-air missile shot down the aircraft, there are increasing tensions in the international community over who is to blame. Henry Ridgwell reports for VOA from London.

Video Undocumented Immigrants Face Perilous Journey to US, No Guarantees

Every day, hundreds of undocumented immigrants from Central America attempt the arduous journey through Mexico and turn themselves over to U.S. border patrol -- with the hope that they will not be turned away. But the dangers they face along the way are many, and as Ramon Taylor reports from the Rio Grande Valley in Texas, their fate rests on more than just the reception they get at the US border.

Video Scientists Create Blackest Material Ever

Of all the black things in the universe only the infamous "black holes" are so black that not even a tiny amount of light can bounce back. But scientists have managed to create material almost as black, and it has enormous potential use. VOA’s George Putic has more.

Video Fog Collector Transforming Maasai Water Harvesting in Kenya

The Maasai people of Kenya are known for their cattle-herding, nomadic lifestyle. But it's an existence that depends on access to adequate water for their herds and flocks. Lenny Ruvaga reports for VOA, on a "fog collector."


World Currencies


Rates may not be current.