Revlon, mired in debt, files for bankruptcy protection

Revlon, the 90-year-old multinational beauty company, has filed for Chapter 11 bankruptcy protection after being weighed down by debt load, disruptions to its supply chain network and surging costs.

The New York-based company said it expects to receive $575 million in financing from its existing lenders, which will allow it to keep its day-to-day operations running. None of Revlon's international operating subsidiaries are included in the proceedings, except for Canada and the United Kingdom. The filing was made in the U.S. Bankruptcy Court for the Southern District of New York.

"Today's filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth," said CEO Debra Perelman said in a statement Thursday.

Revlon joins more than two dozen prominent retailers to declare bankruptcy during the coronavirus pandemic, including Brooks Brothers and J.C. Penney.

Kylie effect

Revlon was slow to adapt to women's shift away from bright color cosmetics like red lipstick to more muted tones starting in the 1990s. Revlon also faced increasing competition not only from the likes of Procter & Gamble, but most recently from celebrity lines like Kylie Jenner-backed Kylie, which don't have to invest a lot in marketing because of their massive social media following.

Revlon's problems only intensified with the pandemic, which hurt sales of lipsticks as people masked up. Sales fell 21% to $1.9 billion in 2020 but rebounded 9.2% to $2.08 billion in 2022 as shoppers went back to pre-pandemic routines. In the latest quarter that ended in March, sales rose nearly 8%. The company avoided bankruptcy in late 2020 by persuading enough bondholders to extend its maturing debt.

In recent months, Revlon, like many other companies, experienced industry-wide supply chain challenges and higher costs. The beauty company said in March that logistical issues hurt its ability to meet customer orders. It also said it was stymied by rising prices on key ingredients and persistent labor shortages.

It's a big change from Revlon's heyday throughout much of the 20th century when it was the second-largest cosmetics company by sales, behind only Avon. Now it's No. 22, according to a recent ranking by fashion trade journal WWD.

The company hit many milestones in its heyday. In 1970, Revlon became the first beauty company to feature a Black model, Naomi Sims, in its advertising. In the 1980s, Revlon made a big splash with its supermodel campaign featuring diverse, famous and new models including Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington, shot by Richard Avedon. Its iconic tagline promised to make women "unforgettable."

$3.3 billion in debt

Revlon, whose brands include Almay, Cutex, Mitchum and Elizabeth Arden, had been a mainstay on store shelves for decades. The company was founded in 1932 and went public in 1996. It is backed by billionaire Ron Perelman's MacAndrews & Forbes. But the brand has struggled in recent years after failing to keep pace with changing beauty tastes and stiffer competition..

Revlon has between $1 billion and $10 billion in assets, according to court documents filed Wednesday. The company reported $3.3 billion in long-term debt in its most recent earnings report from March. Revlon's market cap was $123 million as of Wednesday. 

"Consumer demand for our products remains strong — people love our brands, and we continue to have a healthy market position," Perelman said. "By addressing these complex legacy debt constraints, we expect to be able to simplify our capital structure and significantly reduce our debt, enabling us to unlock the full potential of our globally recognized brands."

Bankruptcy doesn't necessarily spell a company's doom. Court supervision is designed to help companies shed or restructure their debt, restructure their business, and emerge from Chapter 11 as a more competitive company.