90-Year-Old US Cosmetic Giant Revlon Files For Bankruptcy; What Went Wrong?

Cosmetic company Revlon bankrupt after 90 years, the brand cited supply chain disruptions as a contributor to the bankruptcy. Revlon claimed during its bankruptcy filing that supply chain disruptions prompted tense competition for ingredients, driving up the price of raw materials. Due to this, vendors demanded upfront payments instead of the traditional 75 days for payment.

Revlon bankrupt after years of fierce competition from rivals such as Procter & Gamble along with new cosmetic companies backed by celebrities such as Rihanna’s Fenty Beauty and Kylie Jenner’s Kylie Cosmetics. From 2017 to 2021, sales fell by 22 per cent.

Revlon Files For Bankruptcy

The cosmetic brand Revlon filed for Chapter 11 bankruptcy protection. A Chapter 11 filing will allow the brand to continue operating as it works out a pay to repay creditors.

Robert Caruso, Revlon’s chief restructuring officer wrote in the court filing “One tube of Revlon lipstick required 35 to 40 raw materials and component parts… With shortages of necessary ingredients across the company’s portfolio, competition for any available materials is steep”.

Due to the COVID-19 pandemic, ship delivery times were lengthened since 2020, which increased freight costs. Combined with supply chain disruptions, labour shortages, and inflation, the brand had to file for bankruptcy.

Revlon expects to receive 575 million dollars in financing from existing lenders. The aforementioned amount will allow Revlon to continue its day-to-day operations.

History of Revlon

Revlon was formed by brothers Charles and Joseph Revson along with chemist Charles Lachman in 1932. The cosmetic brand began by selling nail enamel. The company branched out into various types of cosmetics and introduced its first lipstick in 1939. Revlon expanded its business internationally in 1955.

In 1970, it became the first beauty company to feature a black model, Naomi Sims. The company then was sold to MacAndrews & Forbes, owned by Ronald Perelman, in 1985. The company went public in 1996 yet the MacAndrews & Forbes remained the controlling shareholder.

Revlon acquired the cosmetics, skincare, and fragrance company Elizabeth Arden Inc in 2016. It also houses the brands Britney Spears Fragrances and Christina Aguilera Fragrances.

In 2018, owner Ronald Perelman’s daughter Debra Perelman took over as CEO and become the company’s first female CEO. By 2020, the company began struggling and sales dropped. Revlon avoided bankruptcy by persuading bondholders to extend their maturing debt.

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