NEW YORK – Cosmetics maker Revlon Inc. (REV) on Monday cut its financial forecasts for 2004 on a slowdown in demand for key products, particularly color cosmetics.
The company also said it would soon obtain $910 million in new financing to restructure debt.
Revlon, based in New York, trimmed its outlook for 2004 adjusted earnings before interest, tax, depreciation and amortization to $190 million from $200 million.
It cut its 2004 sales growth to 3 percent, versus a previous forecast for growth ranging from 8 percent to 9 percent.
Revlon cited a slowdown in demand for key products, particularly color cosmetics, at outlets such as drugstores as well as at discount store chains. The color cosmetics category includes products like lipstick, eyeshadows and blush, whose popularity has come under pressure from the growing lure of antiwrinkle creams and other skincare goods.
The company said it now expected its color cosmetics business to grow by between 1 percent to 2 percent, below an initial projection of a 4 percent increase.
Nonetheless, the maker of Almay (search), Ultimate and Charlie branded cosmetics, is pushing ahead with cost control to mitigate the fallout from sluggish sales growth and underpin its profitability this year, a company statement said.
"We went into 2004 expecting a more robust U.S. color cosmetics category than current trends would suggest," Revlon President and Chief Executive Jack Stahl said.
"We are acting responsibly by revising our spending plans to more appropriately reflect our current top-line trends," he added.
Revlon said it was arranging $910 million in financing, made up of a $750 million term loan and $160 million revolving credit facility. A financing agreement with Citicorp USA, Inc. and Citigroup Global Markets Inc. (C) would refinance and extend to 2010 the maturities on Revlon's debt that matures next year.
The company also said it would shortly begin a cash tender offer to buy any and all of its $363 million outstanding 12 percent Senior Secured Notes due 2005. It added it expected to complete the financing transactions by mid- to late July.
Last month, Revlon unnerved investors by scrapping its initial tender offer for these bonds due to what it called "unfavorable market conditions."