Revlon, the 90-year-old cosmetics giant, has sought protection from the Chapter 11 bankruptcy in the United States because of its crippling debt and growing celebrity competition.
The enamel and lipstick maker said the move would allow it to “strategically reorganize” its finances, pointing to “liquidity constraints” caused by supply chain disruptions and inflation.
Revlon is receiving $ 575 million ($ 815 million) in financing from the debtor in possession to help support its day-to-day operations.
Revlon CEO Debra Perelman has announced that the cosmetics giant is going bankrupt. (AP)
“Today’s presentation will allow Revlon to offer our consumers the flagship products we have delivered for decades, while providing a clearer path for our future growth,” said Debra Perelman, CEO of Revlon.
He added that its “challenging capital structure has limited our ability to navigate macroeconomic issues to meet this demand.”
In recent years, Revlon has lost space and sales to emerging companies with the support of celebrities, such as Kylie Cosmetics by Kylie Jenner and Fenty Beauty by Rihanna.
It has also been affected by supply problems, exacerbated by the COVID-19 pandemic. The resulting product shortage was another major factor in causing Revlon to go bankrupt, and analysts have said it is unlikely to be resolved in the short term.
The company was founded in 1932 by brothers Charles and Joseph Revson and Charles Lachman.
Revlon has been hit hard by a heavy debt burden, disruptions to its supply chain network and rising costs. (AP) Revlon has been hit hard by celebrity-backed start-ups like Rihanna’s Fenty Beauty. (Getty Images for Fenty Beauty for)
Revlon went public in 1996 and in 2016 was bought by Elizabeth Arden in a $ 1.2 billion bet on skin care to avoid competition. It contains several prominent brands, including Britney Spears Fragrances and Christina Aguilera Fragrances.
He also started two years ago when Citigroup accidentally sent nearly $ 1.3 billion of his own money to Revlon lenders. A judge ruled that the bank could not recover the money.
Revlon sales have lagged behind over the years and in 2021 fell 22% from 2017 levels.
Shares have fallen more than 80 percent since the beginning of the year.
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