NEW YORK (AP) — Revlon, a cosmetics maker that broke racial barriers and set beauty trends for much of the last century, has filed for Chapter 11 bankruptcy protection.
The company has been a mainstay on store shelves since its founding 90 years ago in New York City, overseeing a bevy of household names from Almay to Elizabeth Arden.
However, Revlon failed to keep pace with changing tastes and was slow to follow the women who swapped flashy red lipstick for more muted shades in the 1990s.
In addition to losing market share to big rivals like Procter & Gamble, newcomer cosmetic lines from Kylie Jenner and other celebrities successfully capitalized on the massive social media following of famous faces featuring the products.
Already weighed down by mounting debt, Revlon’s woes were only intensified by the pandemic as lipstick ushered in a new era in fashion, this one with medical-grade mascaras.
Sales fell 21% in 2020, the first year of the pandemic, though those sales rebounded 9.2% in its most recent reporting year with vaccines widespread. In the latest quarter ending in March, sales were up almost 8%, but are still below pre-pandemic levels of over $2.4 billion a year.
The global supply chain disruptions that are hampering hundreds of international companies in recent months were too much for Revlon, which narrowly escaped bankruptcy at the end of 2020 by persuading bondholders to extend its overdue debt.
There may be more corporate restructuring in the consumer products sector ahead with the threat of an economic downturn and rising costs of borrowing money.
Revlon said Thursday that, with court approval, it expects to receive $575 million in financing from its existing lenders, allowing it to keep its day-to-day operations running.
“Today’s introduction will allow Revlon to offer our consumers the iconic products we’ve delivered for decades, while providing a clearer path for our future growth,” said Debra Perelman, who was named Revlon President and CEO in 2018. .
His father, billionaire Ron Perelman, backs 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” offers limited ability to navigate.
During its heyday in the 20th century, Revlon was second only to Avon in sales. It now ranks 22nd among cosmetics manufacturers, according to a recent ranking by fashion magazine WWD.
Revlon became the first beauty company to feature a black model in 1970, Naomi Sims. In the 1980s, the company propelled the cosmetics industry forward by putting famous and yet-to-be-discovered models like Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington front and center with a promise to make all women ” unforgettable”.
Perelman, in an interview with The Associated Press late last year before global supply chains went into lockdown, said he was optimistic about the future. The company doubled down during the pandemic to get more online with services like one-on-one virtual consultations through its Elizabeth Arden line, he said.
Perelman also said that the company was learning from celebrity launches to be more agile and that Revlon had regained market share.
None of Revlon’s international operating subsidiaries are included in the proceeding, except for Canada and the United Kingdom. The filing was made in 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 its bankruptcy filing.
Source: www.syracuse.com