Cosmetics giant Revlon files for bankruptcy

Revlon built a cosmetics empire on red nail polish, with lipstick to match. But the pioneering brand, a mainstay of cosmetic cabinets since the Great Depression, has lost its shine amid the rise of a new generation of cosmetic brands, changing shopping habits and supply chain snarls.

The company filed for bankruptcy protection this week, its financial statements awash in red ink.

Revlon filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York, with about $3.8 billion in debt. It said it had secured $575 million in “debtor-in-possession loans” to help fund its operations in bankruptcy. The company has about 5,700 employees.

Revlon’s challenges have been mounting. Amid declining sales in 2020, it cut 1,000 positions in hopes of improving profitability. Later that year, it narrowly avoided filing for bankruptcy by striking a deal with its debt holders. More recently, its businesses have been challenged by coronavirus-related shutdowns in China and supply chain challenges that rippled across the country.

The company was founded in 1932 by Charles Revson, and grew to become the second-largest makeup company in the United States, behind Estée Lauder. Revlon was acquired by billionaire Ron Perelman for $2.7 billion in 1985 through a hostile takeover.

It acquired Elizabeth Arden in 2016 in a purchase funded largely by loans. In the interim, cosmetics entrepreneurs such as Rihanna and Kylie Jenner have emerged. The social media superstars have promoted their products directly to their millions of Instagram followers, embracing inclusive color palettes and sidestepping the drugstores Revlon has traditionally relied on.

“Consumer demand for our products remains strong — people love our brands, and we continue to have a healthy market position,” Revlon’s chief executive Debra Perelman, who is Perelman’s daughter, said in a statement. The company’s stretched balance sheet “has limited our ability to navigate macroeconomic issues in order to meet this demand,” she said.