Revlon, giant of cosmetics the 1990s, filed an application for protection against bankruptcy on Thursday (16) because of its crippling debt and growing competition from celebrity brands.
The nail polish and lipstick maker said the move will allow it to “strategically reorganize” its finances, pointing to “liquidity constraints” brought on by supply chain disruptions and inflation. Revlon is receiving $575 million in debtor financing to help sustain its day-to-day operations.
“Today’s order will allow Revlon to offer our consumers the iconic products we’ve delivered for decades, while providing a clearer path for our future growth,” company CEO Debra Perelman said in a statement. He added that its “challenging capital structure has limited our ability to deal with macroeconomic issues to meet this demand”.
In recent years, Revlon has lost shelf space and sales to companies backed by celebrities such as Kylie Cosmetics, by influencer Kylie Jenner, and Fenty Beauty, by singer Rihanna.
The company was hit by supply problems, aggravated by the Covid-19 pandemic . The resulting product shortages were another major factor in driving Revlon into bankruptcy, and analysts said they are unlikely to be resolved in the short term.
The company was founded in 1932 by brothers Charles and Joseph Revson and Charles Lachman. Revlon went public in 1996 and in 2016 was bought by Elizabeth Arden in an $870 million skincare bet to fend off competition.
Revlon battles several major brands, including Britney Spears Fragrances and Christina Aguilera Fragrances.
It also made headlines two years ago when the Citigroup accidentally sent nearly $900 million of his own money to Revlon’s creditors. A judge ruled that the bank could not recover the money.
Revlon’s sales have lagged over the years and in 2021 are down 22% from 2017 levels. Shares are down more than 80% since the start of the year.
Source: CNN Brasil
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