Revlon Files for Chapter 11 Bankruptcy Protection
Revlon filed for Chapter 11 bankruptcy protection on Wednesday evening as it grappled with a cumbersome debt load and a snarled supply chain. The cosmetics giant said it expects to receive $575 million in debtor-in-possession financing from its existing lender base, which will help to support its day-to-day operations. The filing “will allow Revlon to offer our consumers the iconic products we've delivered for decades, while providing a clearer path for our future growth,” Revlon President and CEO Debra Perelman said in a press release issued Thursday morning. Revlon is the first major consumer-facing business to file for bankruptcy protection in what has been a yearslong pause of distress in the retail sector.
Total Retail's Take: In a email to Total Retail, David Silverman, retail senior director at Fitch Ratings, offered this analysis on the news of Revlon's bankruptcy filing: ""This morning, Revlon filed bankruptcy, finally succumbing to the weight of its heavy debt burden and weak operating trajectory, exacerbated by low cosmetics use during the pandemic. Revlon will likely use the bankruptcy process to shed much of its debt burden, reducing its cash interest expense and allowing it to invest more in its business. Revlon could also take the opportunity to prune its portfolio, given it owns numerous brands, some of which are performing better than others. If executed effectively, Revlon could emerge from bankruptcy with a cleaner balance sheet and a better operating profile, improving longer term business prospects."
Furthermore, continued disruption to the supply chain contributed greatly to Revlon's bankruptcy filing. According to the brand's filing, the company is currently unable to timely fill almost one-third of customer demand for its products, due to an inability to source a “sufficient and regular supply of raw materials.” Shipping components from China to the United States takes Revlon eight weeks to 12 weeks and costs four times 2019 prices, the company reported.
Joe Keenan is the executive editor of Total Retail. Joe has more than 10 years experience covering the retail industry, and enjoys profiling innovative companies and people in the space.
