Revlon files for bankruptcy – The New York Times | Vette Leader

For generations of women, Revlon’s red Fire & Ice, introduced in 1952, was the favorite color of lipstick on a Saturday night.

In which In the ’70s, they squirted Charlie perfume on their wrists and hummed the ubiquitous jingle. And when supermodel Cindy Crawford appeared in Raisin Rage ads in the 1990s, millions of women turned to brown lipstick shades.

“All these big, mega-glamorous supermodels were spokespersons for Revlon,” recalls Tina Catania, 41, who recalls shopping for Revlon as a young girl in the Bronx at a drugstore. “They had the biggest display,” she said, recalling the stickers on the bottom of Revlon products showing the shade and the excitement of trying the lipsticks on at home.

For much of its 90 years, Revlon was the leading cosmetics empire, a mainstay in bathroom cabinetry since the Great Depression. But in recent decades, the company has struggled under the weight of huge debt and competition from new generations of cosmetics brands. Now, coronavirus-related shutdowns in China and associated supply chain disruptions have added additional stress. Revlon filed for bankruptcy protection this week, its financial statements awash in red ink.

The makeup buyers are buying now looks different. In recent years, lines from big names like Rihanna and Kylie Jenner have sprung up and reached fans directly. Social media superstars have promoted these products to their millions of Instagram and TikTok followers, embracing color palettes and bypassing the drugstores Revlon has traditionally relied on to sell its products.

Consumer brands “can get into trouble if they load up on too much debt,” said David Garfield, chief executive officer at AlixPartners and consumer industry expert. They can also “get into trouble if they don’t address major supply chain disruptions,” he added. “The problem with this is that it can become a vicious cycle: disruptions in the supply chain can cause production delays, which can result in late shipments to retailers, which can result in lost shelf space and lost sales – and then the cycle repeats itself.”

The colored bulk cosmetics category, which includes products like eyeshadow, foundation and lipstick, has been growing but hasn’t returned to pre-pandemic sales and may not be expected until 2024, Jefferies analysts predict. While makeup brands like Maybelline, Nyx and ELF each posted double-digit sales growth year over year, Revlon’s growth was 5.2 percent, according to data from Nielsen and Jefferies.

Revlon’s bankruptcy could be a sign of more trouble for consumer brands, bankruptcy advisors said. High inflation, rising interest rates and recession warnings have made shoppers more cautious about opening their wallets. According to S&P Global Ratings, the number of defaults in the United States this year is 40 percent lower than a year ago. But the agency warned that the proportion of distressed securities in the United States is rising rapidly.

Revlon was founded in the early 1930s by brothers Charles and Joseph Revson and Charles Lachman, who introduced a new nail polish brand. The makeup company grew to become the second largest in the United States behind Estée Lauder.

Mr Revson famously wooed female shoppers by promoting the allure of matching red lips and nails. The company’s boom years came in the 1980s with its Most Unforgettable Women in the World campaign, shot by famed photographer Richard Avedon, which featured many of the era’s supermodels, including Ms. Crawford, Claudia Schiffer, Iman and Christy Turlington .

In 1985, Revlon was acquired in a $2.7 billion deal by Ron Perelman, who used a small supermarket chain he controlled, Pantry Pride, to plan the acquisition. Backed by junk bonds, the takeover was credited with sparking a wave of hostile takeovers.

The acquisition helped make Mr. Perelman a billionaire man of the city, making large donations and putting his name on the wings of museums, hospitals and universities when Revlon’s shares were at their peak in 1998.

But by that point, sales were already beginning to fall, and soon Revlon’s stock price too. In 1998, interest on Revlon’s $1.7 billion debt exceeded operating income.

But as many of Mr. Perelman’s other companies went bankrupt, and even after an attempt to sell Revlon, he stuck with the cosmetics brand, investing millions of dollars of his own money to prop it up and declaring it one of the “big ones.” . Consumer Brands” in an interview with The New York Times in 2000.

To diversify and strengthen its business, Revlon acquired other companies including international nail care brand Cutex and Elizabeth Arden in 2016 in a largely debt-financed deal.

But Revlon struggled to regain its market presence as a new group of cosmetics entrepreneurs emerged.

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

Aside from buying an emergency tube of lipstick a few years ago in Astoria, Queens, Ms. Catania has long since stopped buying Revlon makeup, she said; She now favors more upscale brands like Chanel, Nars, and Mac. She said she would consider becoming a customer again for the right product. But, she said of Revlon, “I haven’t seen a rebrand for cool products, I think, since the heyday of the ’90s.”

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