REV - Revlon

[Homestead31]

 

 

I have not followed the cosmetics business at all, but just reviewing the press the general impression is that RDEN was almost collapsing, and all the FCF starts from REV side. So there is definitely need for a large axe here, and the management must be absolutely ruthless at their job, "3G like" I suppose. So knowing the management is critical.

 

 

What makes this a winning, or even a functioning combination?

 

The "media" has been focused on the wrong things IMHO.  Yes - RDEN made some operational mistakes by aggressively pursuing fast growing celebrity fragrance.... but that is all the media seems to focus on. 

 

moving past the headline, the core Elizabeth Arden brand has a skincare and cosmetics business that will fit very well onto the REV platform.  RDEN had been under-investing in this business due to their ill-fated focus on fragrance, and REV had excess capacity in their manufacturing capabilities, so the RDEN skincare and cosmetics businesses should be able to easily hit REV's EBITDA margins of ~18-20%.  Additionally, while RDEN as a whole has been suffering, the cosmetics and skincare businesses have now grown revenue for 7 consecutive quarters. 

 

The fragrance business is more difficult, and will require more work, but given the value that will be extracted from the RDEN cosmetics and skincare businesses, we are paying a very low price for the fragrance business.  IPAR does 15% EBITDA margins on ~500M in fragrance sales.  I don't see why REV should not be able to come close to matching these margins a few years out on the RDEN fragrance business (again - it will require a lot of work).

 

 

[Homestead31]

http://www.barrons.com/articles/revlons-beautiful-outlook-1484379025

 

A well written, very bullish piece in Barron's today, unlike the WSJ piece the other day that had several factual errors and a misleading chart.  A few selected quotes from the Barron's piece:

 

"Revlon's Beautiful Outlook: Its stock could be worth more than twice its current price, even if Ron Perelman doesn't relinquish control."

 

"Revlon is a first-class franchise, with familiar brands, including Revlon, Almay, and Mitchum, among others."

 

"In the past six years, Revlon has grown revenue 51% and Ebitda 60%, by making market-share gains and acquisitions."

 

"As of late, Elizabeth Arden has shown signs of turning around. In the September quarter, the business registered its seventh quarter of net sales growth, helped by new products and a focus on revitalizing its existing brands."

 

"Initially, management identified $140 million in cost synergies, but in a filing released this month, Revlon said it expected that the synergies would exceed that."

 

"Revlon’s highly recession-resistant business generates stable cash flows. The balance sheet, with $2.7 billion in net debt, is highly leveraged, but that level looks manageable."

 

"Still, it’s important to keep in mind that, if the past few years are any guide, a sale isn’t necessary for Revlon’s stock to rise."

 

Continue to think that while the debt load necessitates consideration of a wide range of potential outcomes, the odds are highly skewed in investor's favor and this has the potential to generate high teens returns for years to come as the business integrates, RDEN, pays down debt, and continues to grow both organically (low to mid single digits) and through acquisition (lumpy mid teens).

[tombgrt]

That's nice. I bought some more this week as I believe it is definitely not more expensive than the 52-lows from a month ago considering the news on the extra synergies. It's now my 3th largest position.

[Patmo]

I think they are leveraged up to their eyeballs. ::) They are at the moment 6.5x Net Debt/pro forma adj.EBITDA. Even though the company has hinted that synergies will be bigger and come mostly in 1-2 yrs, they are not here yet.

 

Having said that, I don't think they are going to get killed unless they mess up the merger, shrinking cash flow due to internal or competitive turbulence. And they must absolutely not need any access to capital markets.

 

I have not followed the cosmetics business at all, but just reviewing the press the general impression is that RDEN was almost collapsing, and all the FCF starts from REV side. So there is definitely need for a large axe here, and the management must be absolutely ruthless at their job, "3G like" I suppose. So knowing the management is critical.

 

I do not understand the strategies, channels, and consumer trends well enought to even tell if the combination makes any sense, or if the "synergies" are bogus. I'm not saying they are, but one would need to be an expert to know that. I'm not. Not to mention any possible clash of cultures. According to media, both companies had their issues, and this merger was kind of forced hand even for REV (although that might be inaccurate).

 

What makes this a winning, or even a functioning combination?

 

How refreshing, somebody discussing the internal risks of a business combination. Thank you bonkers

 

A LOT of attention should be put on this transaction because it is key to this investment. Revlon itself is a very mediocre business by all accounts, and it will need to knock one out of the park to make it work. It's very hard to get comfortable with a MATURE business having an accumulated deficit 25x bigger than its most profitable year in the past 5 (and RDEN is not much better on paper either). You're paying almost 30x peak FCF before the merger, and are levered up to the gills with no room for curve balls. This combination needs to be super accretive to justify the current price paid. 140mil in synergies would at best bring the combined entity multiple down to 20x, which is already quite ambitious to begin with. You don't get this much juice from combination synergies alone, they have to be seeing some fat inefficiency in how Elizabeth Arden runs. And making sweeping changes to those processes is where culture clash might come into play.

 

That said, the combination makes a lot of sense strategically speaking. Easy pass for me, but I'll follow it and see where it goes. It will be interesting to see how this develops, and I wish good luck to those who are placing bets.

 

[Homestead31]

 

 

Revlon itself is a very mediocre business by all accounts,

 

Curious why you think this is a mediocre business?

 

thanks

[Homestead31]

https://www.bloomberg.com/news/articles/2017-01-17/revlon-sees-long-term-growth-with-revitalized-brands-marketing

 

Bloomberg article/interview with the CEO talking about hitting $5B in sales by 2021.  the new CEO has made it clear that he is focused on growth, but i hadn't seen this target previously.

 

back of envelope, at 18% EBITDA margins (low vs history and giving no credit for increased scale), and assuming 4x EV/EBITDA, 2% share dilution per year, and a 10x multiple that gets me to a $93 stock.  At 12x - which is likely low if they can grow to $5B by 2021, gets me to $124, and 14x (not crazy given comps) gets me to $155.

 

At 19% EBITDA margins and 3x leverage, i get to $114, $148, and $180 on 10x, 12x, and 14x.

 

Sticking with the $124 target, if you discount that back 4 years at 25% (a high discount rate reflecting the aggressiveness of the revenue forecast and the leverage position) gets me to $51 today. 

 

continue to think this is really cheap.

[Homestead31]

on an unrelated side note, the bloomberg article and the WSJ article from the other day both got the purchase price of RDEN wrong by citing the equity value of the deal, not the enterprise value which is what REV actually paid.

 

another good reminder to 1) do your own work and 2) the quality of journalism is likely at the lowest point ever due to the shift in priority toward getting clicks rather than doing good work.

[Oreo]

https://www.bloomberg.com/news/articles/2017-01-17/revlon-sees-long-term-growth-with-revitalized-brands-marketing

Bloomberg article/interview with the CEO talking about hitting $5B in sales by 2021.

That's 2.5x growth from today. Where are the market share gains supposed to come from? From Loreal?

 

https://www.bloomberg.com/news/articles/2017-01-17/revlon-sees-long-term-growth-with-revitalized-brands-marketing

back of envelope, at 18% EBITDA margins (low vs history and giving no credit for increased scale)

Revlon has not achieved 18% margins in like...25 years.  Come to think of it, Loreal (a business that has revenues of $28b.. i.e. 10x+ the size of Revlon) has margins of just 20%. There you go. That's scale for you.

[tombgrt]

https://www.bloomberg.com/news/articles/2017-01-17/revlon-sees-long-term-growth-with-revitalized-brands-marketing

Bloomberg article/interview with the CEO talking about hitting $5B in sales by 2021.

That's 2.5x growth from today. Where are the market share gains supposed to come from? From Loreal?

 

https://www.bloomberg.com/news/articles/2017-01-17/revlon-sees-long-term-growth-with-revitalized-brands-marketing

back of envelope, at 18% EBITDA margins (low vs history and giving no credit for increased scale)

Revlon has not achieved 18% margins in like...25 years.  Come to think of it, Loreal (a business that has revenues of $28b.. i.e. 10x+ the size of Revlon) has margins of just 20%. There you go. That's scale for you.

 

What's with the offensiveness Oreo? EBITDA margin for FY 2015 was slightly under 20% and you are not including the E. Arden revenue when calculating revenue growth to $5B. Btw, if you actually opened the article you'd know where they hope to find the revenue. Whether it is attainable is something completely different of course.

 

Also interested to learn why this is a very mediocre business. Very leveraged yes. But also quite stable and recession proof. Anyone who thinks you can hit a shorter term (multi)bagger in this US stock market without any operational risk (or pure dumb luck) is dilusional. Risk adjusted however, I'd say this is cheap. Opinions can differ and I'd love to hear why this is such a terrible business with near 20% EBITDA margins.

[Patmo]

The proof is in the numbers, as I mentioned a mature business that has a fat wallop of negative retained earnings (supported by debt, mind you) is a telltale sign, it just speaks for itself. 1 management team fails to deliver, there's something wrong with the management team. 5 management teams fail to deliver, there's something wrong with the business.

 

 

If that's not enough, it finally managed to eke out some earnings at the tail end of the business cycle, a big whopping 5% net margin. A business being recession-proof is a useless feature when it consistently bleeds money, and in the best years makes a few peanuts for its troubles.

 

Now, look beyond the numbers and think of why this would make sense. We're talking about a business that makes smelly water and soap juice. What prevents Joe Entrepeneur down the street from starting the exact same business? What pricing power do they enjoy, when customers can choose between an endless sea of brands that do the exact same function? (Same situation for suppliers)  What could Revlon possibly do to have a lower cost structure or demand a higher price than the next guy? At this point in the business' lifecycle, anything it can come up with, anyone else can match. So there's every indication that history will repeat itself, and you are left betting on the dealmaking being accretive because you're otherwise overpaying for this mediocre business.

 

I love mediocre businesses and thank the golden Gods for the downright crappy ones, that's where the most money is to be made, but you have to pay the right price for them. There's so much to lose here for a paltry gain.

 

Anyway, hope this post doesn't come across as contentious because you asked me to expand on my opinion so I am doing that, I am by no means an expert but for me this is an easy pass.

 

 

[tombgrt]

Thank you Patmo. Appreciate your candor, really. ;)

 

I understand better now what you are saying regarding profitability. Imo you just have to look at it like from a private equity standpoint. You can't just look at net profit and call it a day imo.

 

Regarding business quality I think you are oversimplifying, especially for core Revlon. You could say this about most brands out there. "Why is brand X selling when people could just as well buy brand Y at a lower price?" There are very little businesses that can't be beaten at their own game, very little. No certainties in business and investing. You can also revert it: Why does L'Oreal not achieve higher margins versus core Revlon and why does it get a much higher multiple despite that factor? But this brings us back to what Oreo pointed out as he believes the entire sector is overvalued. Regardless, I thank you both for your insights and will use it as a start to look further.

[Oreo]

tombgrt - apologies, did not mean to come across as a douche.

 

I agree with a lot of what Patmo has said. Another thing I'd mention is that when you have a revolving door of management teams that cannot execute on an existing business base but then buy another one (Arden; a 'meh' kind of brand), and the margins aren't that far off from the market leader (L'oreal), then it makes a lot of sense to ding the company on the EV/EBITDA multiple. In the end, this is a show-me story. On occasion, I do like to invest in levered equity stubs, but the history & the background are just too much for me at >$30.

 

[Homestead31]

obviously this isn't for everyone, but as Joel Greenblatt has said, it is a mistake to not take into account a company's capital structure when considering quality and value, because if the capital structure is inefficient, eventually it won't be.  clearly for much of revlon's history - and currently - cash is diverted to debt holders rather than equity holders, but if we are talking about valuing the BUSINESS not the STOCK that is irrelevant.  it is not hard to argue that putting leverage on a recession proof business makes a ton of sense, rather than paying out 80% of cash flow in dividends the way a company like PG does.

 

As for this being a mature business, i disagree.  take a look at per capita make up spend in the US vs. more developing countries.  there is a ton of room there for upside.  i would agree that the developed world is mature, but there is still growth in emerging.

 

As for all the new entrants etc, that is fine, but they lack scale which matters for production as well as advertising, and they lack distribution.  Revlon has both, and will likely continue to be a bolt on acquirer, as will other major beauty players.  i recognize that many people have a knee jerk reaction against growing through acquisition, but if done properly, it can create alot of value.

 

As for the quality of past management, that is exactly what it is - the past.  Perelman has demonstrated he is serious about focusing on share price by paying up for quality management with operating backgrounds rather than underpaying financial types to act as managers.

 

it is of course very dangerous to ever say, "this time its different" but if you do the work, speak with the company, clean up the financials for all the acquisition and restructuring related charges, you are left with a good business hiding in plain sight in my opinion.

[KJP]

obviously this isn't for everyone, but as Joel Greenblatt has said, it is a mistake to not take into account a company's capital structure when considering quality and value, because if the capital structure is inefficient, eventually it won't be.  clearly for much of revlon's history - and currently - cash is diverted to debt holders rather than equity holders, but if we are talking about valuing the BUSINESS not the STOCK that is irrelevant.  it is not hard to argue that putting leverage on a recession proof business makes a ton of sense, rather than paying out 80% of cash flow in dividends the way a company like PG does.

 

As for this being a mature business, i disagree.  take a look at per capita make up spend in the US vs. more developing countries.  there is a ton of room there for upside.  i would agree that the developed world is mature, but there is still growth in emerging.

 

As for all the new entrants etc, that is fine, but they lack scale which matters for production as well as advertising, and they lack distribution.  Revlon has both, and will likely continue to be a bolt on acquirer, as will other major beauty players.  i recognize that many people have a knee jerk reaction against growing through acquisition, but if done properly, it can create alot of value.

 

As for the quality of past management, that is exactly what it is - the past.  Perelman has demonstrated he is serious about focusing on share price by paying up for quality management with operating backgrounds rather than underpaying financial types to act as managers.

 

it is of course very dangerous to ever say, "this time its different" but if you do the work, speak with the company, clean up the financials for all the acquisition and restructuring related charges, you are left with a good business hiding in plain sight in my opinion.

 

Going from $3 billion to $5 billion in revenue organically in five years requires CAGR of 10-11%.  That does not seem plausible in light of the historical growth of Revlon's brands (or the growth of the industry as a whole).  I think that's the issue with any valuation that suggests the company will actually achieve that kind of growth.  I acknowledge that whether it actually needs to grow like that to work out is a different question.

[Homestead31]

to be clear, the quick thoughts on valuation i posted in comment #30 are not my base case as I have not had a chance to investigate the $5B revenue claim. I agree however that that sounds like a high number, which is why I used a 25% discount rate, which is insanely high for a recession proof branded products company.

 

That being said, my base case, which is tied to single digit growth and an effective integration of RDEN is still around the $60 level assuming the company's multiple does not re-rate toward peers.  If it does, the upside is considerably higher.

[thefatbaboon]

I have a very simplistic question for the Revlon bulls which I can't get out of my head.  I keep asking myself how it is possible for a "good" consumer non-cyclical business to have gone nowhere for 30 years?  And for that business to be under the control of the same person for 30 years and ever be considered investable let alone a good investment. 

 

I look favorably at the filings and listen to calls and check over the market share data and read the positive articles and note the Mittleman position etc etc I even like the leverage at today's low rates, and I thought the EA acquisition was smart and cheap.  BUT I just can't shake this feeling of WTF! I don't think I know of a SINGLE worthwhile consumer non cyclical that goes nowhere for three decades.  And yes, I know that Perelman stuck on too much debt to get it done, and had to sell some valuable properties.  But I'm sorry I don't think that is good enough - we're talking about 3 lost decades. 

[Homestead31]

that is a fair question to ask for sure, and I don't know that there is a great answer.  However, it is important to understand that the stock chart does not tell the whole story.  Perelman first bought the company in the heyday of corporate raiding.  He bought it, and immediately sold off a bunch of assets, stripping the company.  In retrospect we can say that this was probably foolish, and that the company "went no where for 30 years" but Perelman realized something like an immediate 50% return on his investment by stripping the company.  The fact that the company struggled after that point I think says more about Perelman's approach at the time.  From there, the company was clearly under-managed and clearly under-invested in.  The under-managing was likely part due to the debt load, and part due to the quality of the managers, who were mostly financial types, not operational types.  The under-investment part is likely tied to the the debt, but also the aforementioned quality of the managers.

 

it should also be noted that as outside investors we do not know how Revlon has fit into the larger macandrews and forbes portfolio in the past.  what i mean is that Perelman pays taxes on macandrews and forbes' profit, not Revlon's profit, so it may have made sense to keep a very dependable business like makeup in a position where it could be used to generate losses to offset gains at less dependable businesses.  we simply can't know how this may have worked historically, but it makes sense to take this approach if you are a billionaire who hates paying taxes.

 

lastly, as i am sure you know, what matters now is the future, not the past 30 years.  There is no question that the company was a poor performer historically, but in my view, all of the evidence we have today suggests that pereleman is at a point where he is focused on improving the company, and the stock price.  in my view, this is likely because perelman realizes the company is drastically undervalued on a private market basis, and at some point (it could be years) he wants to monetize this (and other) positions.

[thefatbaboon]

Of course the future will determine the future but Revlon history has a special case to answer.  Even the famous RJRNabisco taken out for around $25bn in the mid 80s would be worth multiples today as the parts of Kraft, Mondelez, PepsiCo, Reynolds, Japan Tobacco and Imperial  - my estimate would be around $100bn. And then add to that the massive cumulative cash flows these business lines have contributed to the acquisitions, dividends and share repurchases of their parent companies over 30 years!

 

Have you gone through the history and put together a detailed storyline for Revlon?  I don't think its enough to point vaguely at possible tax-accounting at M&F or to say that there was an immediate 50% return on (of?) investment from initial assets sales.  One needs to trawl through the REV sec filings and know what was paid, when, for what; what was sold, when, for what; sources and uses of cash flow: debt pay down, dividends, repurchase, issuance, acquisitions.  How is it possible that this company has done so badly for so long?  Also you have to break down the history into sections and somehow explain how EACH of the three decades can have been so poor?  For example, I have a recollection that Benckiser/Coty came close to buying Revlon in the late '90s for somewhere in the $1bn-$2bn equity range and all the talk then, like now, was how Ron had decided to rationalize his assets.  (I note that now, 17 years on, both the value and Ron's mooted motivation are about the same)

 

If we were a bunch of value investors looking at a cyclical or asset-based situation then I grant that, while the history would be useful and interesting, it probably wouldn't be critical.  But here is a non cyclical, brand based business and it's performance has been bad for 30 years and for every subdivision of this thirty years.  This is deeply abnormal. Anyone long this stock absolutely needs to go back and pull this history apart year by year to understand precisely how this has been possible.

 

 

[tombgrt]

Well, one of the factors I think you are missing is that value =/ price. So when it's priced at the same level as 17 years ago, that doesn't say much about value. If you believe valuation should be much higher than current price, those 17 years weren't complete shit (I'm talking equity value of $4b+ maybe versus $1-2b). As for early history after the takeover, they shed a lot of assets and were under a heavy debt load. It was mismanaged from the start and Perelman probably was one of the main causes for that. Sure, he's still here and he's singing the same song. But in the meantime the gap between price and IV has widened.

 

Aside from those points, I really don't like to look at history too much. Many examples, including the board's favorites like Berkshire and Fairfax, show that past track records don't necessarily have much meaning. What's great one year can be shit the next and vice versa.

 

An investment in Revlon isn't based on a great track record and the magic of compounding stemming from an easy business with a moat. It's based on current undervaluation in both relative and absolute terms.

[Homestead31]

fatbaboon - broadly speaking, i agree with what you are saying, and if we were talking about a company with a valuation that appeared even close to full, I would say that you were spot on with your approach.  However, when we are talking about a company that is trading at a huge discount to its comps, M&A multiples, and potential, I think understanding 30 years of history is less important.

 

in my view, the job of the analyst with  company that appears very under-priced is to try to understand if that price is appropriate, and not an under-pricing at all.  In the case of Revlon, if the future was going to look like the past, then I would say the current price is appropriate.  However, we know that their is a good chance the future is going to look different because at the moment the company is under-going the integration of RDEN.  The question thus becomes not "what happened 30 years ago" but "what is going to happen in the next 3 years?" 

 

In my view, the integration of RDEN and the new CEO (who Perelman paid up for and is incentivized by a $10M stock grant) puts us in a situation where it is not difficult to see EBITDA (obviously a metric with flaws, but relevant when discussing a levered business) may double in the coming years.

 

Understanding the 30 years is irrelevant in understanding the next 3, except perhaps in the sense of what multiple the business deserves.  Current multiples reflect the failures of the last 30 years.  The beauty of an investment in Revlon however is that we do not need to see multiple expansion to see a very attractive return due to the operational changes that are taking place.  without multiple expansion, there is close to 100% upside in my view.  if in a few years the market decides that "this time it is different" and disregards the last 30 years and instead focuses on the 2016-2019 period, this could be a multi-bagger.

 

As with all investments there are significant unknowns and questions.  it is the job of the analyst to weigh them and consider if they are already more than priced in.  in the case of Revlon, i would argue that they are, and that this represents an excellent opportunity.

[thefatbaboon]

You don't think their history with acquisitions like Playtex/Max Factor, Sinful, Colomer are relevant to your hopes for RDEN?  RDEN is no easy feat - it very nearly flushed itself totally down the toilet!  The fragrances have been a total disaster.  Arden itself has some possibilities but damn this is a really grandmother brand, barely getting proper shelf these days and totally reliant on the gift/promotion category. The only easy thing is the cost-stripping.  Getting it growing properly is going to take real skill and work and good fortune. 

 

You don't think the revolving door history of Fellows, Nugent, Stahl, Kennedy, Ennis, Kennedy (again), Delpani are relevant to your hopes for Garcia? Some of these guys were their day's great hopes brought in from Colgate, Neutrogena, Coca Cola etc. to save Revlon. Most barely lasted a couple years.

 

Revlon isn't expensive today at somewhere just under $5bn EV, but it's not even close to cheap on a simple cash on cash analysis. It's around 10 time EBITDA (and that ignoring some pension overhang and a hefty chunk of instore presentation costs that are getting capitalized).  It's cheap when compared to EL, L'oreal and Coty.  But it's totally crazy to simply expect a comparable multiple.  These other companies (or the people behind them - I'm thinking Becht at Reckitt) have histories over the last 10, 20 and 30 years of making their shareholders sustained double digit cagrs.  Revlon has made it's shareholders nothing for an investing lifetime.  What discount is that worth?

 

If Revlon were a decent brand asset and it's owner a decent manager the arithmetic levers of compounding over 30 years should be making a total nonsense of any subtle analyses of discounts to IV.  It's simply far too much time.  A 7% cagr would get you an 8 fold increase over the period. A 3.5% cagr would get you a triple.  And I certainly wouldn't be here being accused of missing how price =/value unless I were a total idiot.  But Pantry didn't buy Revlon for 80 times EBITDA or 30 times EBITDA back in 1985 - or anything even vaguely close. 

 

If you don't want to look at the history of this company in making your decisions thats fine - I won't belabor the point any more.  But the arguments you've made about the discount to comps, the new ceo, the new market/acquisition, and a newly motivated perelman...well, they've all been made before, multiple times, and if you guys happen to be right this time it's probably just dumb luck because it's not that much cheaper, better-ceo'ed, less perelmanned or better equipped with cosmetic assets today that it's been at any other point in it's sad life.

[Homestead31]

no - i don't think Playtex, which was acquired in the late 1980s is relevant.  I do think Colomer is however, and by all accounts that has been a great acquisition.

 

As for valuation, I disagree that 10x EBITDA is not cheap for a cosmetics business with top ranked brands, but regardless of today's valuation, the investment is predicated on the future, not the present or the past.  As I state previously, in my view, there are good reasons to believe that EBITDA will be significantly higher in a few years.  Even if the stock still trades at 10x EBITDA, if EBITDA is almost double, the stock will do very well.

 

As for RDEN, you are correct to say that fragrances were a total disaster.  That does not matter however, because we are not paying for them.  RDEN's skincare and cosmetics should be able to effortlessly slide into Revlon's production facilities (which have spare capacity) and meet Revlon's 18-20% EBITDA margins (adj for acquisition and restructuring costs).  Additionally, as you noted, RDEN was focused on fragrance for the last few years, and RDEN's brand was allowed to fade.  For forward looking investors that represents opportunity.  Sales of RDEN's skincare and cosmetics have already been growing for several quarters, and on the back of a renewed marketing effort after several years of little or no marketing, there should be substantial upside.  If Revlon is able to turn around the fragrance business, that is just extra gravy on top.

 

As for the revolving door of past CEOs, your point is well taken, but that is where the analysis comes into play.  For example, the stock cratered by 70% under Nugent.  It is no surprise he was shown the door.  Conversely, Perelman paid up for Garcia, even going so far as re-writing the company by-laws to allow for higher compensation for an executive.  Clearly Perelman has faith in him and is giving him a longer leash than his predecessors were given.  It is also worth noting that Garcia had an inside man giving him the lay of the land inside Revlon before his decision to join the company b/c Revlon's COO and Garcia worked together earlier in their careers.  Further, unlike Stahl who was unemployed prior to taking the helm at Revlon, Garcia walked away from a job where he was earning more than $4 million a year to join Revlon.

 

 

[thefatbaboon]

Do you mean Delpani or Garcia?

[Homestead31]

apologies - i mean garcia, and edited the above post to reflect the proper name.

[Homestead31]

Revlon Announces Linda Wells to Join Company as Chief Creative Officer

 

http://phx.corporate-ir.net/phoenix.zhtml?c=81595&p=irol-newsArticle&ID=2244874

 

Ordinarily I don't pay all that much attention to the lower level of the C suite, but I think this hire is notable.

 

First, it reinforces the thesis that Perelman is focused on improving this company.  This is a new role, which means incremental spend, which means Perelman opening the purse strings.  He already paid up for Garcia, he already paid to poach the head of Global Corporate Comms away from Estee Lauder, and now he is hiring a Chief Creative Officer that is not just any geek off the street, but rather someone that is very highly regarded in the beauty/fashion world.

 

Second, cosmetics is increasingly a business that is influenced by "taste makers" such as bloggers, but of course also the traditional media channels such as magazines etc.  By all accounts Linda Wells is extremely well connected in this world, and her relationships with influential people in the beauty/fashion world bodes well for Revlon's plan to continue to enhance the quality of its brands through savvy media placement.