Revlon succumbs to bankruptcy amid crushing debt, rising inflation and global supply chain issues

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Revlon filed for Chapter 11 bankruptcy on Wednesday night as the beauty giant struggles to cope with mounting debt and growing competition from industry newcomers selling online.

The company said in a press release that it expects to receive $575 million in bankruptcy financing from current lenders as it attempts to “strategically reorganize its legacy capital structure and improve its long-term prospects.

The 90-year-old company, bought in 1985 by billionaire financier Ronald Perelman, has faced several headwinds lately, such as supply chain disruptions, stores closed at the height of the pandemic and a growing crop of trendy direct-to-consumer products. brands like Kylie Cosmetics and Rihanna’s Fenty Beauty, taking away market share.

Revlon CEO Debra Perelman, who is Perelman’s daughter, said in a statement that filing for bankruptcy will allow the former company to find a “clearer path for our future growth.”

“Consumer demand for our products remains strong, people love our brands, and we continue to have a healthy market position,” she added. “But our difficult capital structure has limited our ability to manage macro-economic issues in order to meet this demand.”

She continued, “By addressing these complex legacy debt constraints, we hope to be able to simplify our capital structure and significantly reduce our debt, allowing us to unlock the full potential of our globally recognized brands.

According to Revlon’s bankruptcy filing, Revlon’s suppliers became less tolerant of late payments made by the company as they themselves were squeezed by supply chain issues. A Covid-19-related shutdown in China earlier this year also made key components in its products rarer.

Revlon’s business, which includes the Revlon brand, Elizabeth Arden and Almay, is majority owned by MacAndrews & Forbes, Ronald Perelman’s holding company.

Revlon’s portfolio was hit by store closures in 2020, but sales started to rebound. The company reported revenue of $479.6 million for the first quarter of 22, up 7% from a year earlier. Yet Revlon has been unable to avoid supply chain pressures and inflation in an increasingly competitive beauty market.

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