Revlon, the 90-year-old multinational beauty company, has filed for Chapter 11 bankruptcy, weighed down by debt, disruptions to its supply chain network and soaring costs.
The New York-based company said that after court approval, it expects to receive $575 million in financing from its existing lenders, which will allow it to continue day-to-day operations.
“Today’s filing will allow Revlon to bring our consumers the iconic products we’ve offered for decades, while also clearing a clearer path for our future growth,” said Debra Perelman, who was named president. -CEO of Revlon in 2018.
His father, billionaire Ron Perelman, backs the company through MacAndrews & Forbes, which acquired the company through a hostile takeover in the late 1980s. Revlon went public in 1996 .
Perelman said demand for its products remained strong, but its “challenging capital structure” provided limited ability to manage macroeconomic issues.
With brands ranging from Almay to Elizabeth Arden, Revlon had been a mainstay on store shelves for decades. But in recent years, she has struggled not only with heavy debt, but also with tougher competition and an inability to keep pace with changing beauty tastes.
The company was slow to adjust to women’s shift from brightly colored cosmetics like red lipstick to more subdued tones beginning in the 1990s. Revlon also faced increasing competition not only from from Procter & Gamble, but more recently from celebrity lines like Kylie backed by Kylie Jenner, who don’t have to invest much in marketing due to their huge social media following.
Revlon’s problems only intensified with the pandemic, which hurt lipstick sales as people masked up. Sales fell 21% to US$1.9 billion in 2020 but rebounded 9.2% to $2.08 billion this year as shoppers returned to pre-pandemic habits.
In the last quarter that ended in March, sales increased by almost 8%. The company avoided bankruptcy at the end of 2020 by persuading enough bondholders to extend its maturing debt.
In recent months, Revlon, like many other companies, has experienced industry-wide supply chain issues and higher costs. The beauty company said in March that logistical issues were affecting its ability to fulfill customer orders. He also said he was being held back by rising prices for key ingredients and ongoing labor shortages.
It’s a big change from Revlon’s heyday for much of the 20th century, when it was the second-largest cosmetics company by sales, behind only Avon. Today, he is No. 22, according to a recent ranking by fashion magazine WWD.
The company went through many milestones in its heyday. In 1970, Revlon became the first beauty company to feature a black model, Naomi Sims, in its advertising. In the 1980s, Revlon caused a stir with its modeling campaign featuring various famous and new models, including Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington, photographed by Richard Avedon. Its iconic slogan promised to make women “unforgettable”.
During an interview with The Associate Press last fall, Perelman said she was optimistic about the future. As women venture out, Revlon’s makeup sales rebound. She said the company has also used the health crisis as an opportunity to double down on its online investments. During the pandemic, Elizabeth Arden, for example, launched individual virtual consultations.
Perelman also said the company is learning from celebrity launches like Kylie to be more nimble. For example, it has reduced the development of new products by several months. Perelman said she also sees Revlon regaining market share.
None of Revlon’s international operating subsidiaries are included in the proceedings, with the exception of Canada and the United Kingdom. The filing was filed in the United States Bankruptcy Court for the Southern District of New York,
The company listed assets and liabilities between $1 billion and $10 billion, according to the filing.