Revlon seeks bankruptcy protection amid a heavy debt load

Revlon, the 90-year-old beauty multinational, filed for Chapter 11 bankruptcy protection, weighed down by debt burdens, disruptions to its supply network and rising costs.


What do you need to know

  • Revlon, the 90-year-old beauty multinational, filed for Chapter 11 bankruptcy, weighed down by a heavy load of debt, disruptions to its supply network and rising costs
  • The New York-based company said it expects to receive $ 575 million in funding from its existing lenders, which will allow it to keep its day-to-day operations running
  • None of Revlon’s international operating subsidiaries are included in the proceeding, with the exception of Canada and the United Kingdom
  • The filing was filed with the United States Bankruptcy Court for the Southern District of New York

The New York-based company said that, subject to court approval, it plans to receive $ 575 million in funding from its existing lenders, which will allow it to keep its day-to-day operations running.

“Today’s filing will enable Revlon to offer our consumers the iconic products we have provided for decades, while providing a clearer path for our future growth,” said Debra Perelman, appointed president and CEO of Revlon in 2018.

His father, billionaire Ron Perelman, supports 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 its products remains strong, but its “challenging capital structure” has offered limited capacity to address macroeconomic issues.

With brands from Almay to Elizabeth Arden, Revlon has been a mainstay on store shelves for decades. But in recent years he has struggled not only with heavy debt, but tougher competition and the inability to keep up with changing tastes of beauty.

The company has been slow to adapt to women’s shift from brightly colored cosmetics like red lipstick to more muted tones since the 1990s. Revlon has also faced increasing competition not only from the likes of 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 troubles only escalated with the pandemic, which hurt lipstick sales as people dressed up. Sales fell 21% to $ 1.9 billion in 2020, but rebounded 9.2% to $ 2.08 billion in 2022 as shoppers returned to pre-pandemic routines. In the final quarter ended March, sales increased by nearly 8%. The company avoided bankruptcy in late 2020 by convincing enough bondholders to extend their maturing debt.

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 logistics problems have damaged its ability to fulfill customer orders. It also said it was hampered by rising prices for key ingredients and persistent 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. It is now at number 22, according to a recent ranking from the WWD fashion magazine.

The company has achieved many milestones in its heyday. In 1970, Revlon became the first beauty company to feature a black model, Naomi Sims, in its ad. In the 1980s, Revlon had great success with its supermodel campaign with several 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 he was optimistic about the future. As women venture out, Revlon’s makeup sales are picking up. He said the company also used the health crisis as an opportunity to double its investments online. During the pandemic, Elizabeth Arden launched, for example, individual virtual consultations.

Perelman also said the company was learning from celebrity launches like Kylie to be more nimble. For example, you have cut months for new product development. Perelman said he was also seeing Revlon regain market share.

None of Revlon’s international operating subsidiaries are included in the proceeding, with the exception of Canada and the United Kingdom. The filing was filed with the United States Bankruptcy Court for the Southern District of New York,

The company has listed assets and liabilities ranging between $ 1 billion and $ 10 billion, according to the filing.

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