Revlon files for bankruptcy in US after supply chain problems and rising costs |  Retail

Revlon files for bankruptcy in US after supply chain problems and rising costs | Retail

Revlon files for bankruptcy in US after supply chain problems and rising costs |  Retail

Revlon, the 90-year-old multinational beauty company, has filed for bankruptcy protection in the US, amid debt, supply chain network disruptions and rising costs.

The New York-based company said it expects $575 million (£469 million) in funding from its existing backers upon court approval, allowing it to continue its day-to-day operations.

“Today’s filing enables Revlon to offer our consumers the iconic products we’ve supplied for decades, while providing a clearer path for our future growth,” said Debra Perelman, who was named president and CEO in 2018. from Revlon.

Her father, billionaire Ron Perelman, supports the company through MacAndrews & Forbes, which acquired the company in a hostile takeover in the late 1980s. Revlon went public in 1996.

Perelman said demand for his products remained strong, but the “challenging capital structure” offered limited opportunities to navigate macroeconomic problems.

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

The company slowly adapted to women’s shift from bright color cosmetics like red lipstick to more muted shades starting in the 1990s. Revlon has also faced increasing competition, not just from Procter & Gamble, but most recently from celebrities, including Kylie Jenner-backed Kylie, who don’t have to invest much in marketing because of their social media following.

Revlon’s problems only grew with the pandemic, which hurt lipstick sales because people wore masks. Sales fell 21% to $1.9 billion in 2020, but bounced 9.2% to $2.08 billion in 2022 as shoppers returned to pre-pandemic routines. In the last quarter that ended in March, sales increased by almost 8%. The company avoided bankruptcy in late 2020 by convincing enough bondholders to extend its maturing debt.

In recent months, Revlon, like many other companies, has faced supply chain challenges across the industry and increased costs. The beauty company said in March that logistical issues are hurting its ability to fulfill customers’ orders. It also said it was thwarted by rising prices for key ingredients and ongoing labor shortages.

It marks a big change from Revlon’s heyday during much of the 20th century, when it was the second-largest cosmetics company by sales, after only Avon. Now it is number 22, according to a recent ranking from fashion magazine WWD.

The company achieved many milestones in its heyday. In 1970, Revlon became the first beauty company to feature a black model, Naomi Sims, in its advertisements. In the 1980s, it made a big splash with its supermodel campaign, shot by Richard Avedon, featuring various, famous and new models, 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 makeup sales are picking up again. She said the company also used the health crisis as an opportunity to focus on online business. For example, during the pandemic, Elizabeth Arden launched one-on-one virtual consultations.

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Perelman also said the company learned from launches from celebrities like Kylie to be more agile. Thus, it cut off months for developing new products. Perelman said she also saw Revlon regain market share.

None of Revlon’s internationally operating subsidiaries are involved in the proceedings, except Canada and the UK. The filing has been filed with the US 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.