By ANNE D’INNOCENZIO
NEW YORK (AP) — Revlon, a cosmetics maker that broke racial barriers and dictated beauty trends for much of the last century, has filed for Chapter 11 bankruptcy.
The company has been a mainstay on store shelves since its founding 90 years ago in New York, overseeing a stable of household names from Almay to Elizabeth Arden.
But Revlon failed to keep pace with changing tastes, slow to keep up with women as they swapped flashy red lipstick for more muted tones in the 1990s.
As well as losing market share to big rivals like Procter & Gamble, new cosmetics lines from Kylie Jenner and other celebrities have successfully capitalized on the massive social media following of famous faces who showcased the products. .
Already weighed down by mounting debt, Revlon’s troubles have only intensified with the pandemic as lipstick has given way to a new era of fashion, this one with medical-grade masks.
Sales fell 21% in 2020, the first year of the pandemic, although they rebounded 9.2% in the company’s last reporting year with the widespread use of vaccines. In the most recent quarter that ended in March, Revlon’s sales grew nearly 8%, but still lag pre-pandemic levels by more than $2.4 billion a year.
The global supply chain disruptions crippling 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 maturing debt.
There could be more corporate restructurings in the consumer products sector to come with the threat of a recession and rising borrowing costs.
Revlon said Thursday that after court approval, it expects to receive $575 million in financing from its existing lenders, which will allow it to continue day-to-day operations.
“Today’s filing will allow Revlon to bring our consumers the iconic products we’ve offered for decades, while also clearing a clearer path for our future growth,” said Debra Perelman, who was named president. -CEO of Revlon in 2018.
His father, billionaire Ron Perelman, backs the company through MacAndrews & Forbes, which acquired the company through a hostile takeover in 1985. Revlon went public in 1996.
Perelman said demand for its products remains strong, but its “challenging capital structure” provided limited ability to navigate.
At its height in the 20th century, Revlon trailed only Avon in terms of 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 energized the cosmetics industry by bringing famous and yet-to-be-discovered models like Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington to the fore, promising to make all women “unforgettable”.
Perelman, in an interview with The Associated Press last year before global supply chains were locked down, said she was optimistic about the future. The company has doubled down on efforts during the pandemic to connect more with services like one-on-one virtual consultations through its Elizabeth Arden line, she said.
Perelman also said the company is learning from celebrity launches to be more nimble and that Revlon has regained market share.
None of Revlon’s international operating subsidiaries are included in the proceedings, with the exception of Canada and the United Kingdom. The filing was filed in the United States Bankruptcy Court for the Southern District of New York,
The company has listed assets and liabilities between $1 billion and $10 billion, according to its bankruptcy filing.
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