Revlon, Inc.

and the Acquisition of

Elizabeth Arden
FINC 5880 – SU 2019
Anh Bui – 4166016
HISTORY OF REVLON
 Founded in the middle of the US Great
Depression – 1932

 Headquarter in NYC

 Started with a single product - Nail Polish

 Currently, an American multinational cosmetics,

skin care, fragrance and personal care company

 Beauty aids are distributed in over 150 countries

COMPETITOR – ESTEE LAUDER
companies
 Founded in 1946

 Based in NYC

 Started with four products of skin care

 Offers skin care, makeup, fragrance and hair care products

 Over 150 countries

 Under many famous brand names

 Net income of $1.108B in 2018

 Direct competitor for about 70 years

Acquisition of Elizabeth Arden
 June 16, 2016, Revlon agreed to acquire all of the outstanding
shares of Elizabeth Arden for $14.00 per share in cash

 Representing an enterprise value for Elizabeth Arden of

approximately $870 million

 Elizabeth Arden’s common stock ceased trading on the NASDAQ

Stock Market, following the market close on September 7, 2016

 Revlon will continue to be led by its Board of Directors

 The synergy from the acquisition is expected to reduce Revlon's

SG&A Costs by 40%, COGS by 60%, amounting to a total savings
of around $140 million
Acquisition of Elizabeth Arden
Acquisition of Elizabeth Arden
 1. Current Ratio
 2015: 1.57 2016: 1.59 2017: 1.23

 Positive trend from 2015 to 2016

- Increased current assets of approx. $314m

- Increased current liabilities of approx. $193m

 Negative trend but still low current ratio from 2016 to 2017

- Increase of Inventories resulted in increased Current Assets of $20m

- Increase of Short-term debts resulted in increased Current Liabilities of

approx. $153m

 Competitor - Estee Lauder: Current ratio in 2017 is 1.76 – higher

2. Quick Ratio

 2015: 1.21 2016: 0.99 2017: 0.69

Low and decreased quick ratio

- Increased Inventories (approx. $314m)
- Increased Accounts Receivables of approx. $200m
- Increased Currents Liabilities (approx. $417m)

 Competitor - Estee Lauder: Quick ratio in 2017 is 1.33 – higher

Days Sales Outstanding
 2015: 46.70 2016: 66.29 2017: 60.27
Upward trend from 2015 to 2016
- Increased net receivables of approx. $180m
- Increased annual sales of approx. $450m
Downward trend from 2016 to 2017
- Increased net receivables of approx. $20m
- Increased annual sales of approx. $350m
=> Competitor - Estee Lauder: DSO of 2017 is 39.67 -
higher
Inventory Return

 2015: 3.92 2016: 3.01 2017: 2.50

Negative trend from 2015 to 2017

- Increased COGS of approx. $485m

- Increased Inventories of approx. $314m

=> Competitor – Estee Lauder: Inventory Return in

2017 is 1.94 - lower
Times-Interest Earned (TIE)
 2015: 2.33 2016: 1.08 2017: -0.09

Decreased and low TIE

- Decreased EBIT of approx. $207m

- Increased Interest charge of approx. $66m

Competitor – Estee Lauder: TIE in 2017 is 16.47 – higher

 Profit Margin On Sales
 2015: 2.93% 2016: -0.94% 2017: -6.8%

Negative trend and significant low profit margin

- Decreased Net income avail. to common shareholders of approx.

$293m

- Increased Sales of approx. $780m

Competitor – Estee Lauder: Profit Margin on Sales in 2017 is 8.43% -

higher
Price/Earning
 2015: $26.26 2016: -$69.40 2017: -6.26

Decrease in market value from 2015 to 2016

- Increase in Price per share from $27.84 to $29.15

- Decrease in EPS from $1.06 to -$0.42

Increase in market value, still negative from 2016 to 2017

- Decrease in Price per share to $21.80

- Decrease in EPS to -$3.48

Compare to Estee Lauder: the P/E in 2018 is $32.5 – higher

 CONCLUSION

 Revlon’s revenue rose 34.3 percent, to $595 million, in the

quarter, largely driven by its acquisition in September 2016 of
Elizabeth Arden and by strong international sales, which rose by
9.4 percent.

 Revlon sales tumble after $37.4M loss in first quarter of 2017

 Net sales: $2,693 million in 2017 and $2,564 million in 2018

 By the end of 2018, software issues led to inability to file the Form
10-K

 The 10-K Form for 2018 was filed by the end of March 2019
 Thank you!

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