New York — Revlon, the cosmetics maker who broke down racial barriers and dictated beauty trends for much of the last century, has filed for Chapter 11 bankruptcy protection.
The company has been a mainstay on store shelves since its founding 90 years ago in New York City where it has overseen a host of household names, from Almay to Elizabeth Arden.
Revlon failed to keep pace with changing tastes, however, and has slowed in following women as they replaced bright lipstick with more muted colors in the ’90s.
In addition to losing market share to major competitors such as Procter Corporation & Gamble, the newcomer cosmetics lines of Kylie Jenner and other celebrities, has successfully tapped into the massive social media following of the famous faces that have topped the products.
Due to mounting debt, Revlon’s problems only worsened with the pandemic as lipstick gave way to a new era in fashion, one that features medical masks.
Sales fell 21% in 2020, the first year of the pandemic, although those sales rebounded 9.2% in their last report with the spread of vaccines. In the last quarter that ended in March, sales were up about 8%, but it still lags pre-pandemic levels by more than $2.4 billion annually.
The global supply chain turmoil that has hobbled hundreds of international companies in recent months has been too much for Revlon, which narrowly escaped bankruptcy in late 2020 by persuading bondholders to extend its outstanding debt.
There may be more corporate restructuring in the consumer products sector before the threat of economic recession and rising costs of borrowing money.
Revlon said Thursday that it expects to obtain $575 million in financing from its existing lenders subject to court approval, which will allow it to continue its day-to-day operations.
“Today’s registration will allow Revlon to offer our customers the signature products we have offered for decades, while providing a clearer path for our future growth,” said Debra Perlman, who was appointed Revlon President and CEO in 2018.
Her billionaire father, Ron Perlman, supports the company through MacAndrews & Forbes, which acquired the company through a hostile takeover in the late 1980s. Revlon went public in 1996.
Perelman said demand for its products remains strong, but the “hard capital structure” has limited mobility.
During its heyday in the 20th century, Revlon fell behind only Avon in sales. It now ranks 22nd among cosmetic makers, according to a recent ranking by fashion trade magazine WWD.
Revlon became the first beauty company to introduce a black supermodel in 1970, Naomi Sims. In the ’80s, the company revitalized the cosmetics industry by putting undiscovered famous models like Iman, Claudia Schiffer, Cindy Crawford and Christy Turlington front and center, promising to make all women “unforgettable.”
Perelman, in an interview with the Associated Press late last year before global supply chains shut down, said she was optimistic about the future. She added that the company doubled down during the pandemic to get more internet through services such as one-on-one virtual counseling through the Elizabeth Arden line.
Perelman also said that the company has been learning from celebrity launches to be smarter and that Revlon has regained market share.
None of Revlon’s operating international subsidiaries were included in the proceedings, with the exception of Canada and the United Kingdom. Filed in US Bankruptcy Court for the Southern District of New York,
The company has listed assets and liabilities between $1 billion and $10 billion, according to its bankruptcy filing.
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