Iconic cosmetic brand Revlon files for bankruptcy

Revlon has filed for a Chapter 11 bankruptcy in the US, which will allow the company to strategically reorganise its capital structure and improve its long-term outlook. Revlon said in a statement that this comes amidst liquidity constraints brought on by "continued global challenges", including supply chain disruption and rising inflation, as well as obligations to its lenders.

The iconic brand has been around for 90 years and houses other well known brands such as Elizabeth Arden and Ed Hardy. If approved, Revlon expects to receive US$575 million in debtor-in-financing from its existing lender base. Coupled with its existing working capital, this will help the business "manage through current macro-economic challenges and in turn enable it to better serve customers", said Revlon.

Debra Perelman, president and CEO, Revlon said that the court filing will allow Revlon to offer its consumers the iconic products it has delivered for decades, and is committed to ensuring the reorganisation is as seamless as possible for its key stakeholders, including its employees, customers and vendors.

She added that the consumer demand for Revlon's products remain strong, and Revlon continues to have a healthy market position.

"But our challenging capital structure 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 recognised brands," said Perelman.

According to Rueters, Revlon had long-term debt of US$3.31 billion, as of end-March. As part of the reorganisation process, Revlon will file customary "First Day" motions to allow it to maintain operations in the ordinary course. Revlon also plans to pay vendors and partners under customary terms for goods and services received on or after the filing date, while paying its employees as per normal and continue their primary benefits without disruption.

Traditional make up brands have in recent years also faced immense pressure with the rise of celebrity and influencer led brands such as Rihanna’s Fenty Beauty and Kylie Jenner-backed Kylie Cosmetics. Meanwhile, online start-ups too have pushed these giants into a corner having to fight with more nimble players.

In 2018, Revlon also decided to form its its in-house agency The Red House. According to president and Perelman during an earnings call then, The Red House functions as Revlon's new centre of excellence for content creation and drive cost efficiency. She added that Revlon has also upgraded executive talent to build leadership in e-commerce, digital marketing and data and analytics, all of which are areas which Perelman described to be "critical" moving forward.

In 2020, Revlon also announced its Revlon 2020 Restructuring Program that was expected to generate significant annualised cost reductions of between US$200 and US$230 million by the end of 2022. The goal of the 2020 Program was to build a stronger global business operation, enhance the company’s cost efficiency. Approximately 60% of these cost reductions to be realised from headcount reductions occurring in 2020.

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