Revlon, a 90-year-old multinational beauty company, has filed for bankruptcy protection under Chapter 11, burdened by debts, supply disruptions and rising costs.
The New York-based company said it expects to receive $ 575 million in financing from its existing creditors after court approval, which will allow it to maintain its day-to-day operations.
“Today’s submission will allow Revlon to offer our customers the iconic products we have supplied for decades, while providing a clearer path for our future growth,” said Debra Perelman, who has been appointed Revlon’s President and CEO. in 2018
Her father, billionaire Ron Perelman, supported the company through MacAndrews & Forbes, which acquired the business through a hostile takeover in the late 1980s. Revlon went public in 1996.
Perelman said demand for his products remained strong, but his “challenging capital structure” offered limited ability to manage macroeconomic problems.
With brands from Almay to Elizabeth Arden, Revlon has been a staple on store shelves for decades. But in recent years, she has struggled not only with heavy debt, but also with tougher competition and failure to keep up with changing tastes of beauty.
The company is slowly adapting to the transition of women from cosmetics with bright colors such as red lipstick to more muted tones, starting in the 90s. Revlon has also faced growing competition not only from Procter & Gamble, but recently from lines of celebrities like Kylie, backed by Kylie Jenner, who don’t have to invest much in marketing because of her huge social media followers.
Revlon’s problems only intensified with the pandemic, which damaged lipstick sales while people were disguised. Sales fell 21 percent to $ 1.9 billion in the United States in 2020, but recovered 9.2 percent to $ 2.08 billion this year as buyers returned to their routine practices before the pandemic.
In the last quarter, which ended in March, sales rose nearly 8 percent. The company avoided bankruptcy at the end of 2020 by convincing enough bondholders to extend their debt by maturity.
In recent months, Revlon, like many other companies, has faced industry-wide supply chain challenges and higher costs. The beauty company said in March that logistical problems impaired its ability to fulfill customer orders. He also said he was hampered by rising prices for key ingredients and persistent labor shortages.
This is a big change from the heyday of Revlon for most of the 20th century, when it was the second largest cosmetics sales company, after only Avon. He is now number 22, according to a recent ranking by the fashion trade magazine WWD.
The company has reached many stages in its heyday. In 1970, Revlon became the first beauty company to feature a black model, Naomi Sims, in its commercial. In the 1980s, Revlon made a big fuss with his supermodel campaign, which included a variety of famous and new models, including Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington, shot by Richard Avedon. Its iconic slogan promises to make women “unforgettable”.
In an interview with the Associated Press last fall, Perelman said he was optimistic about the future. As women go out, Revlon makeup sales resume. She said the company is also using the health crisis as an opportunity to double investment online. During the pandemic, for example, Elizabeth Arden launched a one-on-one virtual consultation.
Perelman also said the company is learning from being more agile by launching celebrities like Kylie. For example, he interrupts months to develop new products. Perelman said he also sees Revlon regaining market share.
None of Revlon’s international operating subsidiaries are involved in the production, with the exception of Canada and the United Kingdom. The application was made in the US Insolvency Court for the Southern District of New York,
The company has listed assets and liabilities between $ 1 billion and $ 10 billion, according to documentation.
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