The US cosmetics group Revlon has filed for chapter safety after battling provide chain issues and failing to compete with celebrity-backed and social media-savvy upstarts.
The 90-year-old group, majority-owned by billionaire Ron Perelman, on Thursday filed for Chapter 11 chapter safety, which allows the corporate to proceed buying and selling whereas it really works out a plan for repaying collectors.
The corporate — which additionally owns manufacturers together with Elizabeth Arden, Almay and Cutex, together with fragrances fronted by Christina Aguilera and Britney Spears — has liabilities of between $1bn and $10bn, in accordance with the submitting on the chapter court docket for the Southern District of New York.
The collapse of Revlon’s funds follows a downturn for the sweetness sector throughout the peak of the pandemic, adopted by substances shortages and steep value rises this 12 months.
However the firm has additionally confronted longer-term strain from manufacturers resembling Rihanna’s Fenty Magnificence and Kylie Jenner-backed Kylie Cosmetics.
Conventional magnificence manufacturers have additionally struggled to struggle again in opposition to on-line start-ups resembling Glossier, though extra not too long ago the start-up model has itself faltered, shedding a 3rd of its company staff this 12 months.
“Revlon has regularly misplaced its US market share since 2018, however the pandemic dealt an extra blow to the agency on prime of current monetary challenges,” mentioned Lia Neophytou, senior shopper analyst at GlobalData, upfront of the submitting.
“Moreover, its mass market and affordably-priced Revlon magnificence model has confronted competitors from extra trend-led manufacturers leveraging TikTok — a key supply of inspiration for magnificence and grooming purchases — to entice a youthful shopper base.”
The corporate expects to obtain $575mn in debtor-in-possession financing from its current lenders to help day-to-day operations, Revlon mentioned in a launch.
It mentioned it was battling with “liquidity constraints introduced on by continued world challenges, together with provide chain disruption and rising inflation”.
The corporate had $3.3bn of long-term debt on the finish of March, whereas studies of impending chapter final week precipitated a steep drop in its share value. The submitting consists of abroad items in Canada and the UK.
Chief govt Debra Perelman, daughter of Ron, mentioned: “Client demand for our merchandise stays robust — folks love our manufacturers and we proceed to have a wholesome market place.
“However our difficult capital construction has restricted our skill to navigate macro-economic points with the intention to meet this demand. By addressing these advanced legacy debt constraints, we anticipate to have the ability to simplify our capital construction and considerably cut back our debt, enabling us to unlock the complete potential of our globally recognised manufacturers.”
Revlon narrowly averted chapter in 2021 following a stand-off between its homeowners and lender Carl Icahn.