Revlon, a beauty icon in a crowded market, files for bankruptcy

NEW YORK — Revlon, the 90-year-old multinational cosmetics company, has filed for Chapter 11 bankruptcy protection, weighed down by mounting debts, global supply chain disruptions and new rivals.

With household names like Almay to Elizabeth Arden, Revlon has been a mainstay on store shelves for decades. And it’s a company that broke down racial barriers and put supermodels like Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington front and center.

However, it has struggled in recent years due to mounting debt, increased competition and an inability to keep up with changing beauty standards.

The New York City company was slow to follow most women who ditched flashy cosmetics like red lipstick for more muted shades starting in the 1990s. And in addition to rivals like Procter & Gamble, faced increased competition from celebrity cosmetics lines like Kylie Jenner’s Kylie, which took advantage of her huge social media following.

Revlon’s woes were only intensified by the pandemic as lipstick sales fell, with mascaras all the rage at the time.

Sales fell 21% in 2020, the start of the pandemic, though those sales rebounded 9.2% in its most recent reporting year with vaccines now widespread. In the most recent quarter ending in March, sales were up almost 8%. The company avoided bankruptcy at the end of 2020 by persuading enough bondholders to extend their overdue debt.

The New York-based company said 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 macroeconomic problems.

In recent months, Revlon has experienced industry-wide supply chain challenges and higher costs that are challenging businesses globally. He said in March that logistical problems affected his ability to fulfill customer orders. He also said he was hampered by rising prices for key ingredients and persistent labor shortages.

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.

In 1970, Revlon became the first beauty company to include a black model, Naomi Sims, in its advertising. In the 1980s, Revlon caused a stir with its supermodel campaign that featured diverse models, famous and new, including Iman, Claudia Schiffer, Cindy Crawford, and Christy Turlington, while promising to make women “unforgettable.”

As women venture out, Revlon’s makeup sales are picking up. Perelman said the company has also used the health crisis as an opportunity to double down on online investments. During the pandemic, Elizabeth Arden launched one-on-one virtual consultations, for example.

Perelman also said the company was learning from celebrity pitches like Kylie to be more nimble. For example, it cut months of new product development. Perelman said he, too, was seeing Revlon regain 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.

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