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How's this for a midlife adventure? After a 22-year career at Coca-Cola (KO
), where he rose from a junior finance executive to president, Jack Stahl last year landed in the president and CEO office of Revlon (REV
), the storied but troubled cosmetics maker. His new boss: Ronald O. Perelman, who controls 83% of Revlon stock through his MacAndrews & Forbes Group -- and had pushed out two prior Revlon CEOs in the past four years. To complete the reordering of his life, Stahl sold his Porsche and shed the cushy suburban-Atlanta lifestyle of a high-level Coke executive in favor of a Manhattan condo from which he walks to work most days.
Upon his arrival in February, 2002, Stahl immediately set to work. He sought to appease retailers miffed by years of bungled execution, got fractious departments within Revlon to work together more cohesively, and reenergized the marketing with a return to the Revlon brand's celebrity-infused cachet (think Halle Berry and Julianne Moore). The result: Most major retailers seem to be back on Revlon's side, and the core Revlon and Almay brands are growing again.
However, the gains haven't come cheaply. Heavy spending on new retail fixtures, glitzy ads, and tie-ins to hot entertainment properties like James Bond thriller Die Another Day have depleted cash faster than Stahl has been able to conserve it via productivity enhancements. That's a big problem, because Revlon is staggering under a $1.76 billion debt load, which starts to mature in 2005.
Perelman already has stepped in with capital infusions on a couple of occasions to stave off bankruptcy, but many observers wonder how long Stahl can pull off the tricky balancing act of expanding the top line while restoring profitability to the bottom line. Stahl recently assessed his prospects on these critical fronts with BusinessWeek Marketing Editor Gerry Khermouch. Following are edited excerpts of their conversation:
Q: It took a long time to drag you into a room for an interview, in part because you insisted you don't want to be the focus of all the attention. Why not?
A: The reason I'm so stuck on this idea of it not being a Jack Stahl thing is if you look at my background, I started in the communications function [in investor relations at Coke], so I wasn't a technically oriented finance person. The thing I was always able to do was to work with people as part of a team and attract people, develop people. I was never a technical expert, but I always played a role in helping to build strong organizations.
So I'm not giving you traditional CEO BS about the team. That's really how I came through. It's too big and complex a business to be led any other way than through the organization and through the people.
Q: Although you spent 22 years at that mega-marketer, Coca-Cola, you had more of a reputation on the finance and operations side than as a hands-on marketer. How does Revlon play to your strengths?
A: I understand the power of brands and brand positioning, and the importance of linking every marketing action off the center of your connection with consumers. There's huge power in that, and huge value and profitability that can be created. It gives focus and clarity to everything you do.
Q: After such a long run with a blue-chip company like Coke, why venture into one that's beset on so many fronts?
A: It was actually pretty simple. I love brands. I love being associated with great brands. I recognized this would be a different experience than I had before. This was a situation where the field was wide open in terms of creating our future. It wasn't a situation where everything was well-defined and pre-prescribed. It was going to be a more entrepreneurial environment.
Here, I thought I had an opportunity to leverage my skills against a very different set of challenges. At this stage of my life, I thought it would be great for me.
Q: How did you evaluate Revlon's condition before deciding to make the leap?
A: I took a very close look at the brands and how retail customers saw the brands. Everybody was consistent in seeing a huge opportunity to create value and to have an impact. A lot of the problems were a matter of [poor] execution.
I also worked hard to get an understanding of the organization here. And I worked very hard to understand and really define what my working relationship with Ronald [Perelman] would look like. We spent a lot of time together ensuring that we were able to get the most out of that relationship.
And by the way, he has been absolutely perfect. I talk to Ronald almost every day. We share what's going on and bounce things off each other. He has been around the business for the better part of 18 years. He's very smart, and it's a fun, productive relationship.
Q: What were the first things you did once you arrived?
A: I spent a lot of time with retail customers. I also spent a lot of time with our consumers. In an initial jolt of heavy market research, we went out and did 250 or so in-home interviews with women. I would go out with researchers and participate in those interviews. What smacked me in the face right from the beginning was how involved people are with this category. People are involved in soft drinks, too, but nothing like the level of emotional involvement in this category.
Q: You weren't put off by the tarnish on the Revlon brand or the troubled organization?
A: I think the challenge is to reinterpret the brand for today's women. There are certainly opportunities to do that, but it doesn't mean that the brand was tarnished. And I found a lot of very good people. The opportunity was to strengthen the connections across the organization, between functions -- between sales, marketing, operations, research and development -- so we could execute better with our retail customers.
To a customer, the retailers have been very supportive. Even in cases where we had disappointed them, they were still invested in the brand. Retailers will tell you that as Revlon grows, it has a very positive impact on the category. It helps create excitement in the category.
Further, when you do some of the stuff that's right for the brand or the organization, the constituencies of this company are much more responsive than I've ever seen before. I saw it with the advertising: We turned it on aggressively last August  and got an almost immediate response, within 10 days. With most consumer products, you'd see that build over a much more extensive period.
Q: The more energized advertising certainly won you some market share, but it's expensive, and at some point you'll probably have to tighten up. The worry would be, will sales then drop off commensurately? What's your strategy there?
A: First of all, one thing a lot of people miss is our announcement that there was about $160 million of spend over 2002, 2003, probably a little bit in early 2004 -- of which we've already accounted for $130 million -- that were charges associated with initiating the growth. You should not look at those as an ongoing [cost]. We've been very specific on that.
Now, we did step up our media pressure to a competitive level, and that would be more ongoing. If you look at our performance relative to the category, we went from underperforming to outperforming [our rivals], which would suggest that we're getting results from the strategy. So there is some portion of that that's one-time. There's [also] an ongoing nature to it, but one that we would intend to sustain.
The other side of it is that we're just beginning the journey in terms of looking at our operating model. An example of that is our "Carded Eye" initiative [to mount eye products on visually appealing cards rather than dumping them in plastic bins]. Not only is that model going to help us sell more products, it also results in less theft, less damages, less plastic on the wall. It's an example of a change in our operating model that will help create efficiencies and more dollars coming in the door.
There are seven or eight examples of things like that where we're working to change the operating model in ways that will improve our profitability. So you've got a combination of top-line growth and streamlining the operating model. When you add it all up, it gives us a very viable and more profitable business model going forward.
Q: Obviously that's important because of that massive $1.76 billion in debt you have to deal with. How will that ever get resolved?
A: All we're doing here is building the value of the asset, recreating our position with our consumers and our customers, and creating a profitable business model underneath it. If you can create value in the asset, it will attract capital that will allow us to strengthen our balance sheet. We're intent on moving down that path.
Great brands that are run effectively attract capital -- they always have. That's what we've got to do here, and I promise you, we've got 6,000 people trying to do it.