Revlon, 90, has filed for bankruptcy protection in the United States with the cosmetics maker, citing supply issues, rising prices and labor shortages.
The overnight filing on June 16 saw the company’s share price drop 13% in New York, with the company saying it expects to receive $575 million (€546 million) support from its existing lenders.
Filing for Chapter 11 for bankruptcy protection in the United States will allow Revlon to continue operations while developing a plan to repay its creditors.
Revlon said in its filing that intense competition for raw materials drove up prices and, in some cases, required an upfront payment. According to Revlon’s Director of Restructuring, Robert Caruso, this has caused: “Shortages of necessary ingredients across the company’s portfolio.
He added: “For example, a tube of Revlon lipstick requires 35-40 raw materials and components, each of which is essential to bring the product to market.”
Internationally renowned Revlon supplies fragrances worn by many famous faces, including Britney Spears and Christina Aguilera, as well as market-leading brands such as Elizabeth Arden, Almay and Cutex.
Competition in the cosmetics market is fierce with many new brands promoted by international stars and supported by companies with strong distribution and supply chains.
According to a BBC report Revlon President and CEO Debra Perelman said the bankruptcy filing will allow the company to “bring our customers the iconic products we’ve offered for decades while providing a clearer path for our future growth.
Founded in 1932 by brothers Charles and Joseph Revson and Charles Lachman, Revlon began selling nail polish and by the mid-1950s had become an international brand. In 1985 it was purchased by MacAndrews & Forbes from billionaire businessman Ronald Perelman and listed on the New York Stock Exchange.
The company, which sells its products in more than 150 countries, is in the process of being delisted, a normal practice when a company files for or is granted Chapter 11 bankruptcy.
Revlon, the cosmetics maker had $3.3 billion (3.135 billion euros) in long-term debt at the end of March and warned it was facing: “liquidity constraints caused by persistent global challenges, including supply chain disruption and rising inflation.”
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