New York: Revlon Inc has filed for bankruptcy after the US cosmetics firm buckled under debts it built up in efforts to compete with online-focused upstarts. Revlon Cosmetics is known for its nail polishes and lipsticks. However, Wednesday the 90-year-old company listed assets and liabilities of between $1 billion and $10 billion in a court filing.
Revlon was formed in 1932 by brothers Charles and Joseph Revson and Charles Lachman. The company in recent years has lost shelf space and sales to startups backed by celebrities such as Kylie Jenner’s ‘Kylie Cosmetics’ and Rihanna’s ‘Fenty Beauty’.
“The brands in Revlon’s portfolio are themselves a little older and do not offer the hype that the contemporary customer is looking for,” Thomai Serdari, a professor of marketing at New York University, said.
The company has also been hit by supply issues, made worse by the Covid-19 pandemic. Resulting product shortages were another major factor in tipping Revlon into bankruptcy. Analysts have said they were unlikely to be resolved in the near-term.
Competitor and ‘CoverGirl’ owner Coty Inc (COTY.N), by contrast, has gained market share by investing heavily to improve supplies.
“Our challenging capital structure has limited our ability to navigate macro-economic issues,” said Debra Perelman, Revlon chief executive since mid-2018. She is the daughter of Ron Perelman, who owns its controlling shareholder MacAndrews & Forbes.
Revlon, which started off selling nail enamel, was sold to MacAndrews & Forbes in 1985 and went public 11 years later.
Revlon bought Elizabeth Arden in an $870 million skincare bet in 2016 to fend off competition. It houses brands including Britney Spears Fragrances and Christina Aguilera Fragrances.
But the company’s sales lagged over the years and in 2021 fell 22 per cent from its 2017 levels. It also made headlines two years ago when Citigroup Inc accidentally sent nearly $900 million of its own money to Revlon’s lenders.
Revlon, which had long-term debt of $3.31 billion as of March 31, said Thursday it expected to get $575 million in debtor-in-possession financing from its existing lender base upon receipt of court approval.
The company said none of its international units, except Canada and the UK, are part of the Chapter 11 bankruptcy proceedings.
