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Revlon forms in-house agency called The Red House, said to part ways with Grey

Revlon has parted ways with Grey, after having formed its in-house agency The Red House. According to president and CEO Debra Perelman during the latest earnings call, The Red House will function as Revlon’s new centre of excellence for content creation and drive cost efficiency.

“Our strategy continues to focus on strengthening our brands and enhancing the avenues through which we communicate and connect with our consumers. We are focused on ensuring broad availability of our products where the consumer shops in both brick and mortar and online,” Perelman said. The company is also “consistently focused” on enhancing its business practices, streamlining processes and controlling its cost.

She added that Revlon has also upgraded executive talent to build leadership in e-commerce, digital marketing and data and analytics, all of which are areas which Perelman described to be “critical” moving forward. Revlon will also implement a comprehensive digital transformation plan, which involves assembling tech processes and the right level of talent and bandwidth to build capabilites that are of critical importance.

In addition to the formation of The Red House, an internal incubator has also been formed to nurture new initiatives. Perelman said Revlon recognises the dynamics that play in the cosmetics industry and across the market, with the growth in e-commerce and migration of media consumption to the digital and mobile space.

Grey was appointed to manage global creative duties last July, offering integrated communications services including traditional and digital advertising, as well as promotion and activation marketing to Revlon’s portfolio of brands such as Elizabeth Arden, Elizabeth Taylor, Revlon and Cutex. While Grey’s US spokesperson confirmed the news to AdAge, its spokesperson in Asia could not confirm the news to Marketing at the time of writing.

Meanwhile in June this year, the cosmetics company appointed IPG Mediabrand’s Initiative to handle global media duties, which also covers the Southeast Asia market. This follows a review the beauty brand launched in May, which saw other agencies such as Omnicom’s OMD and Havas vying for the account. Incumbent and fellow WPP agency MediaCom did not take part in the review. Marketing has reached out to Grey for comment.

Revlon posted a net sales of US$606.8 million in the second quarter of 2018 (Q2 2018) for the period ended 30 June 2018, compared to US$645.7 million during the same period last year. Meanwhile, Perelman said during the earnings call that it is experiencing 46% growth in China and 35% growth in travel retail.

According to the financial statement, the decrease was mainly driven by approximately US$30 million net sales declines related to the SAP service level disruptions at its plant in Oxford, North Carolina. This impacted the Revlon and portfolio segments mainly in the international market. Revlon also lost certain licenses in 2018 in the fragrance segment. These declines, however, were partially offset by net sales growth associated with new products in the product segment, and global growth in the Elizabeth Arden segment.

Net sales for the Revlon segment was US$258.3 million during Q2 2018, compared to US$289.5 million last year. This was due to lower net sales of Revlon color cosmetics and Revlon ColorSilk hair color, primarily in the international markets due to the Oxford, N.C. service level disruptions, in addition to consumption declines in North America.

Elizabeth Arden, on the other hand, witnessed an increase in netsales from US$101.1 million to US$106.1 million in Q2 2018. This can be attributed to higher net sales of Elizabeth Arden skin care products, including Ceramide and Prevage, principally in international markets.

Net sales for portfolio brands, such as CND Shellac and Cutex, also increased from US$143.4 million to US$147.6 million. This was primarily driven by higher net sales of Almay color cosmetics following the relaunch of the brand and lower sales incentives, as well as higher net sales of CND nail products as a result of Shellac nail polish innovation. Meanwhile, net sales for the fragrances segment dropped from US$111.7 million last year to US$94.8 million this year.

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