Revlon files for bankruptcy after missing social media-fuelled makeup boom
The bankruptcy caps a tumultuous period for the 90-year-old company, which suffered during the pandemic and faced years of declining sales as consumer tastes changed and upstart brands ate into its market share
Revlon filed for Chapter 11 bankruptcy this week, unable to manage its heavy debt load after failing to tap into a cosmetics sales boom driven by social-media influencers.
The cosmetics giant, owned by US billionaire Ron Perelman, sought court protection in the Southern District of New York after the global supply chain crunch and steep inflation deepened its woes.
Revlon has been unable to keep pace with rivals L’Oreal and Estée Lauder as well as upstart makeup and personal-care brands that have turned to video bloggers and Instagram personalities to fuel growth.
In its court filings, Revlon listed assets totalling $2.3bn (about R37bn) as of late April. That stands in contrast to total debts of $3.7bn, which include its 6.25% senior notes due in 2024, according to court papers dated June 15.
Chapter 11 filings allow a company to continue operating while it works out a plan to repay creditors.
The bankruptcy caps a tumultuous period for the 90-year-old company, which suffered during the pandemic and faced years of declining sales as consumer tastes changed and upstart brands ate into its market share.
Revlon got its start selling nail polishes in the throes of the Great Depression, and later added co-ordinated lipsticks to its collection. By 1955, the brand was international.
Perelman’s holding company, MacAndrews & Forbes, took control of Revlon in an acrimonious takeover in 1985.
MacAndrews & Forbes at one point sued Revlon over the company’s acceptance of a lower offer from Forstmann Little & Co, resulting in a landmark Delaware court decision on the fiduciary duties of board members, sometimes dubbed the “Revlon rule”.
The company’s debt load proved burdensome, especially after it sold more than $2bn of loans and bonds to fund its acquisition of Elizabeth Arden in 2016. It also owns brands including Cutex and Almay, and markets in more than 150 countries.
In recent years, it has struggled to compete with newer brands that advertise heavily on social media. The pandemic provided another blow, and, more recently, the company struggled to address supply chain problems and inflation that dented margins.
Revlon narrowly staved off multiple previous defaults by cutting deals with creditors to rework its obligations out of court, and later found itself ensnared in one of the banking industry’s most infamous blunders when Citigroup — intending to process a routine loan interest payment — instead mistakenly paid some Revlon creditors nearly $900m.
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