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Revlon, Inc. - Lehman Brothers Collection

Revlon, Inc.

List of Deals

The origins of Revlon Inc. date back to 1931, when Charles Revson and his older brother, Joseph Revson, distributed Elka nail polish as Revson Brothers. Within a year, Charles decided to open his own nail polish company, going into partnership with Joseph and a nail polish supplier named Charles R. Lachman, who contributed the "l" to the Revlon name. Revlon was established in 1932. Charles noticed that the permanent-wave boom was making beauty salons more popular, and that demand for manicures was rising at the same time. He therefore targeted beauty salons as a market niche. Within its first nine months, the company boasted sales of $4,055. In 1933 there was a sharp rise to $11,246. That same year, the company incorporated as Revlon Products Corporation. The company grossed $68,000 at the end of 1934; sales had multiplied more than forty times by 1937.

Revlon enlarged its market that year by retailing his nail polish through department stores and selected drugstores. The company steered clear of cut-rate stores, selling his product only at premium prices. Advertising became key to maintaining this policy. Its use was a fateful step for the industry; never again would major cosmetics companies attempt to sell beauty items without it. The company began to label its nail enamels with evocative names like Fatal Apple and Kissing Pink. Revlon's first commercial advertisement appeared in the New Yorker in 1935.

Revlon had a whole line of manicure products by 1940. Lipstick, Revlon's next major item, appeared in 1940. The company began an advertising campaign touting "matching lips and fingertips"; the campaign proved to be greatly successful, with 1940 sales figures reached $2.8 million. World War II brought shortages of glass bottles and metal lipstick cases; paper was used as a substitute. Aromatic oils, fixatives, and packaging materials were also in short supply, as they were previously imported. Since the shortages affected the entire industry, secrecy was replaced by mutual cooperation; new synthetics and domestic sources of supply were shared, and a new U.S. aromatics industry was born. During the war, Revlon produced first-aid kits, dye markers for the navy, and hand grenades for the army.

At the end of the war, Revlon listed itself as one of America's top five cosmetic houses. The company bought Graef & Schmidt, a cutlery manufacturer, which made it possible for Revlon to produce its own pedicure and manicure instruments, instead of buying them from outside supply sources. Revlon's 1952 Fire and Ice campaign was one of its most successful, raising that year's net sales to almost $25.5 million. In 1955 the company again scored an advertising success when it became the sole sponsor of the CBS television show, "The $64,000 Question." Net sales for 1955 grew to $51.6 million, from $33.6 million the previous year. That year, an allegation of wiretapping was filed against Revlon by Hazel Bishop. The charge was denied by Revlon controller William Heller, who nevertheless admitted "monitoring" employee's telephones for training purposes. Revlon reorganized as Revlon, Inc., in November of that year. The company went public one month later and was listed on the New York Stock Exchange a year later. The success of "The $64,000 Question" led to a spin-off named "The $64,000 Challenge." The two shows helped to raise the company's net sales figures to $95 million in 1958 and to $110 million in 1959. This success came to an end in 1959 when charges were levied that both shows had been rigged.

During the early 1960s Charles Revson became aware that his company was in danger of locking itself into a narrow, upper-middle-class image that could restrict sales. The company then segmented its product line into six principal cosmetics houses, each with its own price range, advertising program, and image. Princess Marcella Borghese aimed for international flair; Revlon was the popular-priced house; Etherea was the hypoallergenic line; Natural Wonder served youthful consumers; Moon Drops catered to dry skins; and Ultima II was the most expensive range. Early attempts to diversify into other fields were unsuccessful. For instance, Knomark, a shoe-polish company bought in 1957, sold its shoe-polish lines in 1969. Other poorly chosen acquisitions, such as Ty-D-Bol, the maker of toilet cleansers, and a 27 percent interest in the Schick electric shaver company were also soon discarded.

The company's first successful acquisition came in 1966, when it bought U.S. Vitamin & Pharmaceutical Corporation. The buy-out brought Revlon a company with annual sales of $20 million, most of them coming from a drug used to treat diabetes. U.S. Vitamin proved its worth within a year with its acquisitions of Laboratories Grossman, a Mexican pharmaceutical company; a comparable concern in Argentina; and another in Chile. Another U.S. Vitamin acquisition was Nysco Laboratories and its Nyscap process for timed-release medication. This, in turn, led to the introduction of vasodilation drugs. Fully disposable injectables, introduced in 1968, also came from U.S. Vitamin.

Revlon had begun to market its products overseas at the end of the 1950s. Worldwide markets produced sales of $281 million by 1967. The 1970s began with annual sales of about $314 million. The cosmetics division, its six lines separately aimed, advertised, and marketed, was the industry leader in all franchised retail outlets. Revlon fragrances, such as Norell and Intimate for women and Braggi and Pub for men, had also become familiar to U.S. consumers. Revlon also had a new line of wig-maintenance products called Wig Wonder. An important 1970 acquisition was the Mitchum Company of Tennessee, makers of antiperspirants and other toiletries. In 1973 Revlon introduced Charlie, a fragrance designed for the working woman's budget. Charlie was an instant success and helped raise the company's net sales to $506 million in 1973, and to almost $606 million the following year.

The company gained new leadership in 1974; Charles Revson named Michel Bergerac his successor. Bergerac introduced the Performance Incentive Profit Sharing Plan, which allotted each executive points based on profit objectives achieved for the years 1974 to 1976. He also cut company spending with tighter inventory controls and the elimination of 500 jobs. Also that year, Bergerac installed a management-information system requiring that all managers report monthly on problems, sales, and competition. Bergerac's first major purchase came in 1975 when he acquired Coburn Optical Industries, a manufacturer of ophthalmic and optical processing equipment and supplies.

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