In a decision that has shocked the world, 90 year-old iconic US beauty brand ‘Revlon’ has filed for bankruptcy after revealing the company was up to AUS $14 billion in debt.
The long-standing beauty company took to court this week to initiate Chapter 11 proceedings, also known as Chapter 11 bankruptcy protection, in a desperate effort to survive its substantial debt.
According to United States Courts, “This chapter of the Bankruptcy Code generally provides for reorganization, usually involving a corporation or partnership. A chapter 11 debtor usually purposes a plan of reorganization to keep its business alive and pay creditors over time.”
Revlon CEO Debra Perelman released a statement revealing the court filing would allow the company to get back on its feet and support “future growth”.
“Today’s filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth,” Perelman said.
According to The Washington Post, “Revlon said Thursday that upon court approval, it expects to receive AUS $815 million in financing from its existing lenders, which will allow it to keep its day-to-day operations running”.
The announcement comes as Revlon struggles to compete with rival brands including L’Oreal, Kylie Cosmetics, Estee Lauder Cos., Procter & Gamble and other up-and-coming companies capitalising on sales through social media and celebrity/influencers.
In statistics released by The Washington Post, the company’s sales had dropped a substantial 21% in 2020, before recovering a 9.2% soon after. Despite the hopeful rebound, the company remains at a $2.4 billion a year decrease than before the pandemic hit. 9 News said the company’s revenue had fallen a devastating 90 per cent since the beginning of 2022.
Revlon oversees a number of well-known beauty brands including Elizabeth Arden, Almay, Christina Aguilera Fragrances and Britney Spears Fragrances, among others. According to news.com.au, the company currently holds “operations in over 150 countries” and has substantially “suffered from the global supply chain crisis and high inflation”.
Revlon was originally founded on March 1, 1932 in New York, by brothers Charles and Joseph Revson, and chemist Charles Lachman. Ronald Perelman, father to Revlon’s CEO, bought the company in 1985. Since then, the company has reported an outrageous net loss of AUS $95 million from January to March 2022.
Whether the company will truly be able to survive the current debt issues combined with growing inflation, supply chain and competitor pressures is yet to be known.