by Anne D’Innocenzio
NEW YORK ( Associated Press) — Revlon, a cosmetics maker that broke down 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 it was founded in New York City 90 years ago, overseeing a fixture of household names from Almay to Elizabeth Arden.
But Revlon failed to keep pace with changing tastes, slowing to follow women as they traded flashy red lipsticks for more muted tones in the 1990s.
In addition to losing market share to bigger rivals like Procter & Gamble, newcomer cosmetic lines from Kylie Jenner and other celebrities successfully capitalized on social media following famous faces fronting the products.
Already weighed down by mounting debt, Revlon’s problems only intensified with the pandemic as lipstick paved the way for a new era in fashion, featuring a medical-grade mask.
Sales declined 21% in 2020, the first year of the pandemic, although they returned 9.2% with vaccines in the company’s most recent reporting year. In the latest quarter that ended in March, Revlon sales rose nearly 8%, but are still lagging behind pandemic levels by more than $2.4 billion a year.
The global supply chain disruptions that have plagued hundreds of international companies in recent months were too much for Revlon, which escaped bankruptcy by persuading bondholders to extend their maturing debt at the end of 2020.
With the threat of a slowdown in the consumer products sector and rising borrowing costs, there could be more corporate restructurings ahead.
Revlon said Thursday that upon court approval, it expects to receive $575 million in financing from its existing lenders, which will allow it to continue its day-to-day operations.
“Today’s filing will allow Revlon to continue to offer our consumers the iconic products we’ve delivered for decades, while providing a clear path for our future growth,” said Debra Perelman, Revlon’s President and CEO nominee in 2018.
Her father, billionaire Ron Perelman, supports the company through McAndrews and Forbes, which acquired the business in 1985 through a hostile takeover. Revlon went public in 1996.
Perelman said demand for its products remained strong, but its “challenging capital structure” offered limited ability to navigate.
During its heyday in the 20th century, Revlon was only behind Avon in sales. It is now ranked 22nd among cosmetics manufacturers, according to a recent ranking of the fashion trade journal WWD.
Revlon became the first beauty company to introduce black model Naomi Sims in 1970. In the 1980s, the company energized the cosmetics industry by placing both well-known and yet-to-be-discovered models such as Iman, Claudia Schiffer, Cindy Crawford, and Christy Turlington front and center, promising to make all women “unforgettable”. did.
Perelman said in an interview with the Associated Press last year before the shutdown of global supply chains that she was optimistic about the future. She said the company has doubled down on getting more online during the pandemic with services like one-on-one virtual consultations through its Elizabeth Arden line.
Perelman also said that the company is learning from celebrity launches to be more agile and the market share Revlon has gained.
Except for Canada and the United Kingdom, none of Revlon’s international operating subsidiaries are involved in the proceedings. was filed in the US Bankruptcy Court for the Southern District of New York,
According to the bankruptcy filing, the company listed assets and liabilities of between $1 billion and $10 billion.
Follow Anne D’Innocenzio: http://twitter.com/ADInnocenzio