U.S. cosmetics group Revlon has filed for bankruptcy protection after battling supply chain issues and failing to compete with celebrity-backed and social-media-savvy upstarts.
The 90-year-old conglomerate, majority-owned by billionaire Ron Perelman, filed for Chapter 11 bankruptcy on Thursday, allowing the company to continue while developing a creditor repayment plan. trade.
The company, which also owns brands including Elizabeth Arden, Almay and Cutex, as well as fragrances led by Christina Aguilera and Britney Spears, is at risk of being delisted from the New York Stock Exchange after filing in bankruptcy court for the Southern District of New York.
Revlon’s financial collapse comes after a downturn in the beauty industry during the coronavirus pandemic, and the group has been hit this year by shortages of ingredients and sharply rising costs. Sales continue to lag pre-pandemic levels.
The company is also facing long-term pressure from brands like Rihanna’s Fenty Beauty and Kylie Jenner-backed Kylie Cosmetics.
Traditional beauty brands are also fighting back against online start-ups such as Glossier, although the startup itself has recently faltered, cutting a third of its workforce this year.
“Revlon has gradually lost its U.S. market share since 2018, but the pandemic has dealt a further blow to the company in addition to existing financial challenges,” said Lia Neophytou, senior consumer analyst at GlobalData, ahead of the filing. .”
“Furthermore, its mass-market and affordable Revlon beauty brands face competition from more trend-setting brands that are using TikTok, a major source of inspiration for beauty and beauty purchases, to reach a younger consumer base.”
Revlon, a household name since World War II, expects to receive $575 million in funding from existing lenders to support day-to-day operations, Revlon said in a release.
It said it was battling “liquidity constraints from ongoing global challenges, including supply chain disruptions and rising inflation”. Revlon said in March that supply chain disruptions caused shortages of its own products.
The company had $3.3 billion in long-term debt at the end of March, and reports of an impending bankruptcy last week sent its shares tumbling sharply. The document includes Canadian and British overseas units.
Ron’s daughter, CEO Debra Perelman said: “Consumer demand for our products remains strong. People love our brands and we continue to maintain a healthy market position.
“But our challenging capital structure limits our ability to address macroeconomic concerns to meet this demand.”
She said addressing “complex legacy debt constraints” would “[enable] We will unleash the full potential of our globally recognized brand.”
Revlon narrowly avoided bankruptcy in 2021 after a standoff between its owner and lender Carl Icahn.