Source: Financial Times
The US cosmetics group Revlon has filed for bankruptcy protection after battling supply chain problems and failing to compete with celebrity-backed and social media-savvy upstarts.
The company, a household name since the second world war, expects to receive $575mn in funding from its existing lenders to support day-to-day operations
The 90-year-old group, majority-owned by billionaire Ron Perelman, on Thursday filed for Chapter 11 bankruptcy protection, which enables the company to continue trading while it works out a creditor repayment plan.
The company, which also owns brands including Elizabeth Arden, Almay and Cutex along with fragrances fronted by Christina Aguilera and Britney Spears, faces delisting from the New York Stock Exchange following its filing with the bankruptcy court for the Southern District of New York.
The collapse of Revlon’s finances follows a downturn for the beauty sector during the height of the coronavirus pandemic, while the group has been hit this year by ingredients shortages and steep cost rises. Sales had continued to lag pre-pandemic levels.
The company has also faced longer-term pressure from brands such as Rihanna’s Fenty Beauty and Kylie Jenner-backed Kylie Cosmetics.
Traditional beauty brands have also struggled to fight back against online start-ups such as Glossier, although more recently the start-up brand has itself faltered, laying off a third of its corporate employees this year.
“Revlon has gradually lost its US market share since 2018, but the pandemic dealt a further blow to the firm on top of existing financial challenges,” said Lia Neophytou, senior consumer analyst at GlobalData, ahead of the filing.
“Furthermore, its mass-market and affordably priced Revlon beauty brand has faced competition from more trend-led brands leveraging TikTok — a key source of inspiration for beauty and grooming purchases — to entice a younger consumer base.”
The company, a household name since the second world war, expects to receive $575mn in funding from its existing lenders to support day-to-day operations, Revlon said in a release.
It said it was battling with “liquidity constraints brought on by continued global challenges, including supply chain disruption and rising inflation”. The supply chain disruption had led to shortages of its own products, Revlon said in March.
The company had $3.3bn of long-term debt at the end of March, while reports of impending bankruptcy last week caused a steep drop in its share price. The filing includes overseas units in Canada and the UK.
Chief executive Debra Perelman, daughter of Ron, said: “Consumer demand for our products remains strong. People love our brands and we continue to have a healthy market position.
“But our challenging capital structure has limited our ability to navigate macroeconomic issues in order to meet this demand.”
She said addressing the “complex legacy debt constraints” would “[enable] us to unlock the full potential of our globally recognized brands”.
Revlon narrowly avoided bankruptcy in 2021 following a stand-off between its owners and lender Carl Icahn.
