Revlon May be Exiting China

Revlon May be Exiting China

Logical Harmony reader Katie clued me in to some potentially exciting news today! Revlon is reportedly leaving the Chinese market in order to cut business costs. Currently, their market in China only makes up about 2% of their business. For many years business growth for cosmetics brands in China was higher than anywhere worldwide. That has been on the decline and it looks like selling in China may no longer be profitable.

This change will likely include Revlon owned brands, Almay and Sinful Colors. Currently all three brands test on animals “as required by law”.

Revlon said it is leaving China and cutting 1,100 jobs as part of a cost-cutting measure.

Most of the jobs cuts will be in China. Revlon’s operations there make up only 2 percent of the company’s sales, which have been declining.

Global sales fell 1.3 percent to $1.02 billion in the nine months through September, compared with the same period in 2012. Revenue in Asia dropped 3.5 percent to $166.8 during that time.

The departure will save the makeup company $11 million a year, Revlon said Tuesday in a regulatory filing with the U.S. Securities and Exchange Commission.

Revlon expects to take a $22 million restructuring charge, mostly this year. About $10 million of that charge is for employee severance and other benefits, and about $12 million consists of product discounts and inventory write-offs.

Besides its namesake brand of makeup and hair dye, Revlon also makes cosmetics under its Almay and SinfulColors brands.

The New York-based company has had major executive changes this year, naming a new CEO in October after Alan Ennis left. It also announced a new CFO in July after its former financial executive left to join another company.

The new chief executive, Lorenzo Delpani, came from Colomer Group, which Revlon acquired for about $660 million in October. Colomer sells hair color and other products to beauty salons.

Shares of Revlon Inc. rose 36 cents, or 1.5 percent, to $24.92 in afternoon trading Tuesday.

Source – Revlon to exit China business to cut costs on Yahoo News

What does this mean for Revlon’s cruelty free stance? It’s hard to tell at this point. Leaving China, where animal testing is required by law, does not necessarily mean that the brand will stop testing on animals.

What’s unclear is if this means the brand will just be closing manufacturing facilities in China or if this will in any way effect their sale of cosmetics in China. This press article indicates that this may be the case and Revlon may still plan to sell in China. Even if they were to import products into China, they would likely still be tested on animals.

What is important, however, is that this shows entering this market may no longer be as financially lucrative to brands. Many formerly cruelty free brands have changed their stance on animal testing just to enter markets where testing is required by law. In most cases, this has been to sell in China.

I have been unable to find an official press release about this change, but will continue to look. Logical Harmony will keep an eye on this issue and post updates as they come up! Thanks again to Katie for notifying me of this article!


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