Revlon Files for Bankruptcy in the US After Supply Chain Issues and Skyrocketing Costs | Retail business
Revlon, the 90-year-old multinational beauty company, has filed for Chapter 11 bankruptcy in the United States, weighed down by debt, disruptions to its supply chain network and soaring costs .
The New York-based company said that with court approval, it expects to receive $575m (£469m) in funding from its existing lenders, which will allow it to continue its 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 fiercer competition and an inability to keep pace with changing beauty tastes.
The company was slow to adapt to women’s shift from brightly colored cosmetics such as 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, including Kylie Jenner-backed, who don’t have to invest heavily in marketing due to their social media following.
Revlon’s troubles intensified with the pandemic, which hurt lipstick sales as people wore masks. 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.
This marks a big shift 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, he caused a stir with his model campaign, photographed by Richard Avedon, featuring various models, famous and new, including Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington; a slogan promised to make women “unforgettable”.
Last fall, Perelman said she was optimistic. As women venture out, Revlon’s makeup sales rebound. She said the company has also used the health crisis as an opportunity to focus on online business. 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 made 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.