Makeup giant Revlon files for bankruptcy

The cosmetics company says it hopes to refinance and keep trading, after claiming that demand for products remains strong.

On Thursday, Revlon, which is majority-owned by billionaire Ron Perelman, filed for Chapter 11 bankruptcy protection, which enables the company to continue trading while it works out a creditor repayment plan.

The 90-year-old beauty brand says it has been struggling with supplier payments, inflation and labour shortages. The New York-based company said that on court approval, it expects to receive $575m in financing from its existing lenders, which will allow it to keep its day-to-day operations running. Its shares lost more than 13% in New York trading after the announcement.

“Today’s filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth,” said Debra Perelman, who was named Revlon president and CEO in 2018. Her father, Perelman said that demand for its products remained strong, but its “challenging capital structure” offered limited ability to navigate macro-economic issues.

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

Revlon’s problems intensified with the pandemic, which damaged sales of lipsticks as people wore masks. As reported by Financial Times, sales fell 21% to $1.9bn in 2020 but rebounded 9.2% to $2.08bn in 2022 as shoppers went back to pre-pandemic routines. In the latest quarter that ended in March, sales rose nearly 8%. The company avoided bankruptcy in late 2020 by persuading enough bondholders to extend its maturing debt.

Revlon was formed in 1932 by brothers Charles and Joseph Revson and Charles Lachman and started selling nail polish soon after. By the mid-1950s it had become an international brand. It was bought by billionaire Perelman’s MacAndrews & Forbes in 1985. Revlon now sells products in more than 150 countries.

 Earlier this year, Revlon warned that it was facing “liquidity constraints brought on by continued global challenges, including supply chain disruption and rising inflation”.

It had $3.3bn of long-term debt at the end of March, and reports of its impending bankruptcy last week caused a slide in its share price.

  • Writer Chris Saunders
  • Banner Image Credit Instagram / Revlon

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