Written by Brenda Nakalema

Revlon Files for Bankruptcy Protection

Revlon announced shocking news on Thursday that it had filed for Chapter 11 bankruptcy protection citing supply chain disruptions, rising …

Revlon announced shocking news on Thursday that it had filed for Chapter 11 bankruptcy protection citing supply chain disruptions, rising inflation and high debt obligations.

The company that was previously praised for its move towards breaking racial barriers and was the gold standard for beauty trends for much of the 21st century found itself in an unenviable position when its sales started to plummet.

Revlon could not keep up with the ever-shifting tastes, especially as women abandoned flashy red lipstick for more muted tones. In addition to losing market share to rivals such as Proctor & Gamble, more modern cosmetic lines like Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty beauty made huge waves when the celebrity founders were able to capitalize on their astronomical social media following.

Already burdened by rising debt, Revlon’s problems only increased with the pandemic as lipstick was replaced by a new fashion fad, one featuring medical-grade masks. Sales tanked 21% in 2020, the first year of the pandemic, though there was a brief rebound of roughly 9.2%.

In the last quarter that ended March, sales climbed nearly 8% but still lagged in pre-pandemic levels in the excess of $2.4 billion a year.

Corporate restructuring is expected in the consumer products sector ahead of the ongoing threat of an economic recession plus the rising costs of borrowing money.

The Cosmetics giants (ticker: REV), which is owned by billionaire Ron Perelman’s MacAndrews & Forbes, said it expected to receive $575 million in debtor-in-possession financing from its already existing lender base to keep its daily operations afloat.

“Today’s filing will allow Revlon to offer our loyal consumers the iconic products we have delivered for decades while providing a clearer path for our future growth,” said Debra Perelman, Revlon.

In its glory years, Revlon was only second to Avon in sales but currently holds the 22nd spot on the list of cosmetics makers according to a recent ranking by the fashion trade journal, WWD.

In 1970, Revlon was the first cosmetics brand to feature a black fashion model, Naomi Sims. In the 1980s, the company breathed life into the cosmetics industry by featuring famous and ‘yet-to-be-discovered’ models such as Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington.

In an interview last year, Ms Perelman claimed to be optimistic about the future of the brand. With this bankruptcy filing, none of the company’s international operating subsidiaries will be included in filings- only the Canada and United Kingdom subsidiaries.

The company listed assets and liabilities between $1 billion and $10 billion.