Revlon Filing for Bankruptcy is Just Another Chapter in the Brand’s Story
The global beauty market has been closely following the developments following the recent announcement from cosmetics giant Revlon, officially informing that the company filed for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of New York. The company cited ongoing challenges maintaining their global supply chain and rising inflation issues, as well as the brand’s existing obligations to its lenders. With court approval, the company could receive upwards of $575 million in debtor-in-possession financing from the existing lender base.
According to the documents, Revlon is currently unable to fill almost a third of its expected consumer demand for products due to challenges in sourcing “sufficient and regular supply of raw materials.” Moreover, the company revealed that shipping materials from and to China takes up to 12 weeks and costs today four times the 2019 prices, leading to shortages and rising expenses. Revlon listed its assets and liabilities between $1 billion and $10 billion, but has more than $3 billion of debt according to reports.
A week following the company’s filing Revlon (REV) shares have been selling fast, driving the share price as high as 62.5% at $6.06 on June 21st. This spike came on mass volume with a higher-than-average number of shares changing hands. According to nasdaq.com Revlon is expected to post quarterly loss of $1.31 per share in its upcoming report, representing a year-over-year change of -29.7%. Revenues are expected at $507.3 million, up 2% from the year-ago quarter, meaning the company goes onward with good projections for the future reassuring shareholders and investors that the end is not nigh at all.
Similar to investor’s expectations, it is clear that Revlon is not going anywhere and it’s presence in the market will evolve, but not diminish. Same as the ‘near miss’ in late 2020 when the company had warned that it may be forced to file for Chapter 11 protection. Revlon avoided bankruptcy that time with enough of its bondholders agreeing to a debt restructuring program, helping the brand survive the sales drop brought on by the global pandemic. It is important to remember that Revlon is not just lipstick and nail polish, as the company has in its holdings roster dozens of beauty brands operating in various markets and segments.
For example, the Fragrance brands owned by Revlon are doing very well in both high-end and low-cost levels. ALLSAINTS, a cooperation with the established fashion brand, is sold on multiple retailers in Europe including the popular Douglas.de and Fenwick.co.uk. In the US the brand is also sold through the mega chain Ulta.com where ALLSAINTS has an average consumer rating of 4.5. Another successful cooperation in that sector is the Christina Aguilera Fragrances, including 11 unique lines sold all over the world and marketed at affordable prices. In the US shoppers can find Christina Aguilera at Walmart where price tags start as low as $7.48 for EDP mini spray for women. In the Men’s category Revlon also has a good foothold with American Crew, promoted as America’s #1 styling brand for men. The brand’s variety of Hair and skin care products is available through more than 15 retailers online, including Ulta.com where American Crew is dominating the Men’s Hair Care top 20 best sellers list with five of its 36 products, not surprising as the brand has a positive 4.8 average rating across categories.
