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Cosmetics giant Revlon files for bankruptcy

After years of fierce competition from online rivals and supply chain problems, Revlon, a cosmetics giant, has filed for bankruptcy.

After Revlon declared bankruptcy in America, the cosmetics giant Revlon is being saved in Australia.

The company filed a court filing this week to initiate Chapter 11 proceedings to manage its debt. It claimed that it owed $US1 billion ($1.4b), $US10 billion ($14b).

Revlon, a brand known for its nail polish and lipsticks, reported long-term liabilities in the first quarter of $US3.3 billion ($4.68b).

“Today’s filing will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth,” CEO Debra Perelman said in a statement.

The United States has Chapter 11, also known reorganisation bankruptcy. This allows firms to restructure while being protected against creditors and still able to operate.

To keep the company afloat, the company will continue to invest in its New Zealand and Australia operations.

“Consumer demand for our products locally remains strong – people love our brands, and we continue to have a leading market position in Australia and New Zealand,” said Tracey Raso, managing director of Revlon Australia and New Zealand.

“This filing in the US will allow Revlon to continue to offer our consumers the iconic products we have delivered for decades.” .

Revlon filed bankruptcy in the US following years of fierce competition from US competitors. These rivals were focused on online sales, supply chains problems, and missing a boom in sales driven by social media.

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The company stated it expected to receive $US575m ($815m), financing from its lenders, if its bankruptcy case is approved by court.

Revlon, owned by billionaire investor Ronald Perelman but run by his daughter Debra Perelman from January to March, reported a net loss $US67 million ($95m).

The company, which includes Britney Spears Fragrances, Almay, Elizabeth Arden and Almay among its brands, has been hit hard by high inflation and the global supply chain crisis.

Revlon has also been subject to increasing competition, which has impacted revenue in recent years.

It has been unable to keep pace with rivals L’Oreal and Estee Lauder as well as upstart make-up and personal-care brands that have turned to video bloggers and Instagram personalities to fuel growth.

The company was embroiled in controversy in August 2020 when Citibank revealed that it had accidentally transferred $US900 million ($1.2b) to several of Revlon’s creditors.

The bank then filed a lawsuit against an investment fund for refusing to pay a part of the sum. However, the complaint was dropped by the court.

BloombergRevlon, a New York company, is reported to have struggled to remain relevant and stem falling revenue amid fierce competition from Estee Lauder Cos. as well as smaller companies that use social media to attract customers. This was made worse by the Covid-19 lockdowns that sent makeup demand plummeting.

The company also faces financial problems.

The company’s Australian arm is still profitable but it could be sold by the parent company.

Revlon’s Australian subsidiary has lodged accounts for 2021 showing that it has been profitable in the past two years, despite facing headwinds related to the global pandemic.

Source: news.com.au

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