Shares of iconic cosmetics company Revlon (NYSE:REV) were lower by as much as 10.5% on May 10. The cause of the decline was the company's first-quarter 2021 earnings update. Although the company pegged the results as its best first quarter in five years, it was hardly a smashing success.
Revlon's sales in the first quarter of 2021 came in at $445 million, down about 2% or so from the first quarter of 2020. That, however, was a sequential improvement from the fourth quarter when sales were down roughly 10% year over year. Still, Wall Street had been anticipating $520 million on the top line, so Revlon missed expectations in a pretty notable way. And it's worth noting that the sequential improvement was merely from bad to less bad, which isn't exactly a great outcome despite being, directionally speaking, a good sign.
Meanwhile, on the bottom line, Revlon's adjusted loss was $1.55 per share. That was notably worse than the adjusted loss of $1.22 per share in the first quarter of 2020 and Wall Street consensus estimates of $1.08 per share of red ink. Although the company noted strength in higher-end fare, its mass channel products lagged. And apparently by enough to drag down the broader business as Revlon looks to work its way back from the impacts of the coronavirus pandemic while also continuing to implement broader turnaround efforts that have been under way for a number of years.
In fact, Revlon announced its Global Growth Accelerator Program today, yet another restructuring effort to get the company off of its back foot. This plan is basically a continuation of the old one, extended out to 2023. If that news hadn't been accompanied by worse-than-expected top- and bottom-line performances perhaps investors would have welcomed it, but it is clear that Revlon is still a work in progress. The pandemic, meanwhile, hasn't made the turnaround any easier. All in, Wall Street wasn't in the mood to invest in this consumer discretionary sector fixer-upper today and, perhaps, for good reason.