Revlon, in debt, files for bankruptcy

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Revlon, the 90-year-old multinational beauty company, has filed for Chapter 11 bankruptcy after being weighed down by debt, disruptions to its supply chain network and soaring costs.

The New York-based company said it expects to receive $575 million in funding from its existing lenders, which will allow it to continue day-to-day operations. None of Revlon’s international operating subsidiaries are included in the proceedings, with the exception of Canada and the United Kingdom. The filing was made in the United States Bankruptcy Court for the Southern District of New York.

“Today’s filing will allow Revlon to bring our consumers the iconic products we’ve offered for decades, while providing a clearer path for our future growth,” CEO Debra Perelman said in a statement Thursday. .

Revlon joins more than two dozen leading retailers to declare bankruptcy during the coronavirus pandemicincluding Brooks Brothers and JC Penney.

Kylie Effect

Revlon was slow to adapt 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 $1.9 billion in 2020 but rebounded 9.2% to $2.08 billion in 2022 as shoppers returned to their 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 held back by rising prices for key ingredients and continued 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”.

$3.3 billion in debt

Revlon, whose brands include Almay, Cutex, Mitchum and Elizabeth Arden, had been a mainstay on store shelves for decades. The company was founded in 1932 and went public in 1996. It is backed by billionaire Ron Perelman’s MacAndrews & Forbes. But the brand has struggled in recent years after failing to keep pace with changing beauty tastes and tougher competition.

Revlon has between $1 billion and $10 billion in assets, according to court documents filed Wednesday. The company reported long-term debt of $3.3 billion in its latest earnings report in March. Revlon’s market capitalization was $123 million on Wednesday.

“Consumer demand for our products remains strong – people love our brands and we continue to have a healthy market position,” Perelman said. “By addressing these complex legacy debt constraints, we hope to be able to simplify our capital structure and significantly reduce our debt, allowing us to unlock the full potential of our globally recognized brands. »

Bankruptcy does not necessarily mean loss for a business. Forensic oversight is designed to help businesses get rid of or restructure their debt, restructure their business, and emerge from Chapter 11 as a more competitive business.

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