Cosmetics powerhouse Revlon has filed for bankruptcy.
The 90-year-old global beauty giant reportedly filed for Chapter 11 bankruptcy protection, citing new competitors, supply chain struggles, and increasing debt.
After the Wednesday filing, Revlon’s shares plummeted by 31% to $1.55 by Thursday.
“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,” explained CEO Debra Perelman.
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According to Perelman, the demand is still very much alive for Revlon products. She instead blamed the company’s “challenging capital structure” for the filing, claiming it “has limited our ability to navigate macro-economic issues in order to meet this demand.”
“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,” she added.
Billionaire Ronald Perelman, her father, is the company’s controlling shareholder.
After court approval, the company expects existing lenders to prop it up with $575 million so it can continue operations.
The company has between $1 billion and $10 billion in assets and liabilities, per the filing.
At one point, Revlon was second only to Avon in cosmetics sales. However, the company was ranked 22nd in a recent ranking by fashion trade journal WWD.
Sales fell 21% in 2020, the beginning of the COVID-19 pandemic, but bounced back slightly in the most recent quarter, rising by 8%.
Perelman says the company is adapting to the changing landscape of cosmetics, noting that it is learning from celebrity brands such as Kylie Jenner’s and Rihanna’s.
Revlon shortened its product development time by a number of months and used pandemic shopping trends to its advantage, with Elizabeth Arden launching one-on-one virtual consultations.
As a result, she says, the company is regaining customers.
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The worldwide company’s filing only includes the United States, Canada, and the United Kingdom.
