It is not every day that you hear a 90 year old company filing for bankruptcy. On 16th June 2022, Revlon Inc filed for Chapter 11 bankruptcy in the southern state of New York. This section provides protection to a company and allows it to continue operating while it works out a plan to repay its debt.
About the company
Revlon was the baby of Ms Elizabeth Arden. In 1952, Revlon shined in the beauty industry with its matching lips and fingertips campaign. In 1970, Revlon was the first beauty company to feature an African American model in its advertising. With the most lustrous lipstick, nail enamel and iconic perfumes Revlon had an impressive beauty portfolio. The company operates in four segments: Revlon, Elizabeth Arden, Portfolio, and Fragrances. Revlon consists of company’s flagship Revlon brands. Elizabeth Arden consists of Elizabeth Arden branded products. The company’s portfolio segment markets, distributes and sells a comprehensive line of premium, specialty and mass products.
What went wrong?
Before filing for bankruptcy the company faced years of declining sales and loss of customer base. The company failed to keep up with the new brands which emerged left, right and centre. The company is faced with huge debt, supply chain crunch, and high inflation. Pandemic made things worse. To top it up the Ukraine-Russia conflict, lockdown in China and the global supply chain disruption is burning up its capital. The company has been irregular with its vendor payments, thus the vendors have become intolerant towards late dues clearance. The company has strong demand for products but is facing shortage of components due to supply chain failure. The company reported net loss of $ 67 million in the first quarter of 2022 versus $ 96 million in the prior year period.
Next move…
The company now focuses on managing its complex capital structure to come out of the debt situation. Revlon was trading at $11.66 a share at the start of the year. After its bankruptcy announcement, the share price fell to $ 1.95. There are reports that Reliance Industries is eyeing to buy the debt-stricken cosmetic giant. This news resulted in the shares trading at an all-time high. The company intends to pay all its creditors and stay in the good books.
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