Revlon, a 90-year-old worldwide cosmetics corporation, has filed for Chapter 11 bankruptcy protection, citing mounting debt, supply chain interruptions, and rising prices as reasons.
Following court clearance, the New York-based company hopes to get $575 million in financing from its existing lenders, allowing it to continue operating as usual.
“Today’s filing will allow Revlon to continue to provide our customers with the iconic goods we’ve offered for decades while also paving the way for our future growth,” said Debra Perelman, who was named president and CEO of Revlon in 2018.
Her father, billionaire Ron Perelman, is a shareholder in the firm, which was purchased in a hostile takeover in the late 1980s by MacAndrews & Forbes. In 1996, Revlon began trading on the stock exchange.
Demand for Perelman’s products is still robust, but the company’s “difficult capital structure” limits its capacity to overcome macroeconomic challenges, according to Perelman.
Revlon had been a staple on store shelves for decades, with brands like Almay and Elizabeth Arden. However, the company has struggled in recent years not only with massive debt but also with increased competition and an inability to keep up with changing aesthetic trends.
Beginning in the 1990s, the brand was sluggish to adjust to women’s preference for muted tones over bold colors like red lipstick. Revlon was also facing increased competition, not only from Procter & Gamble but also from celebrity lines like Kylie Jenner‘s Kylie, who don’t need to spend as much money on marketing due to their large social media following.
The epidemic exacerbated Revlon’s troubles, as people disguised up and reduced lipstick sales. As buyers returned to their pre-pandemic routines, sales plummeted 21% to $1.9 billion in 2020, then rose 9.2 percent to $2.08 billion in 2022. Sales increased by roughly 8% in the last quarter, which concluded in March. By persuading enough investors to extend the company’s maturing debt in late 2020, it avoided bankruptcy.
Revlon, like many other corporations, has been dealing with supply chain issues and increased expenses in recent months. In March, the cosmetics company stated that logistical challenges were hampering its capacity to fulfill consumer orders. It was also stymied by growing ingredient prices and continuous labor shortages, according to the company.
It’s a far cry from Revlon’s glory days, when it was the second-largest cosmetics company in terms of revenue, trailing only Avon, for much of the twentieth century. According to a recent ranking published by fashion trade publication WWD, it is now ranked No. 22.
During its peak, the firm achieved numerous milestones. Revlon was the first cosmetics firm to use Naomi Sims, a Black model, in its advertisements in 1970. Revlon’s supermodel campaign in the 1980s, shot by Richard Avedon, included a broad group of famous and new models, including Iman, Claudia Schiffer, Cindy Crawford, and Christy Turlington. Women would be “unforgettable,” according to the popular tagline.
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Perelman expressed her optimism for the future in an interview with The Associated Press last November. Revlon’s makeup sales are increasing as more women step out. According to her, the corporation took advantage of the healthcare crisis to increase its internet investments. Elizabeth Arden, for instance, began offering one-on-one virtual consultations throughout the pandemic.
Perelman also stated that the corporation was learning how to be more nimble by studying celebrity launches such as Kylie’s. It reduced the time it took to develop new items by months, for example. Revlon, too, is regaining market share, according to Perelman.
With the exception of Canada and the United Kingdom, none of Revlon’s international operating subsidiaries are involved in the case. The petition was filed in the United States Bankruptcy Court for the Southern District of New York, which is located in New York City.
According to the report, the company’s assets and liabilities ranged from $1 billion to $10 billion.
