The 90-year-old Cosmetic company has filed for Chapter 11 bankruptcy protection, the inflation caused the company to be a victim to global supply chain disruptions that pushed up raw material costs and prompted vendors.
Its bankruptcy filing stated that Revlon supply chain disruptions prompted intense competition for ingredients used to make its products. Retailers that offered up to 75 days for payment began demanding cash in advance of new orders, while labour shortages and inflation added to its troubles. This out rooted the brand space in stores.
Robert Caruso, who was hired as Revlon’s chief restructuring officer, wrote in a court filing.
“For example, one tube of Revlon lipstick requires 35 to 40 raw materials and components, each of which is critical to bringing the product to market,” Robert Caruso, who was hired as Revlon’s chief restructuring officer, wrote in a court filing.
“With shortages of necessary ingredients across the company’s portfolio, competition for any available materials is steep”
The global pandemic suppressed the brand production and deliverance to its loyal customers as they have lengthened shipment delivery times since 2020, pushing up freight costs, while the Russia-Ukraine war and lockdowns in Shanghai have added to supply chain disruptions this year
The giant cosmetic intently ended multiple previous defaults by cutting deals with creditors to rework its obligations out of court, and later found itself ensnared in one of the banking industry’s most infamous errors when Citigroup, intending to process a routine loan interest payment, but it mistakenly paid some Revlon creditors nearly $900 million.
Revlon has struggled to compete with newer brands and those owned by rivals L’Oréal and Estee Lauder that have turned to video bloggers and Instagram personalities to fuel growth. The pandemic provided another blow to sales.
Shares in Revlon fell by up to 44% on Thursday on the bankruptcy filing before closing 13%.
Revlon bought Elizabeth Arden in a $870m (about R13.8bn) skincare bet in 2016 to fend off competition. It houses brands including Britney Spears Fragrances and Christina Aguilera Fragrances.
“Consumer demand for our products remains strong—people love our brands, and we continue to have a healthy market position. But our challenging capital structure has limited our ability to navigate macroeconomic issues to meet this demand,”
The Revlon future is still unpredictable at this point
