Supply chain problems and increased costs kill Revlon

Cosmetics company Revlon has filed for bankruptcy. The iconic company is struggling with high debt, supply chain disruptions and rising costs. Yet it hopes to continue operations with financing from its existing lenders, after court approval. The amount involved is $575 million.

In recent years Revlon has had to deal with a heavy debt burden, as well as increased competition and an inability to keep pace with changing beauty ideals. In addition, it faced increasing competition, not only from Procter & Gamble, but also from celebrity lines such as those of Kylie Jenner. These lines do not need to invest much in marketing because of their large reach on social media.

Problems exacerbated by pandemic

Revlon’s problems were exacerbated by the pandemic. The company escaped bankruptcy at the end of 2020 by persuading enough bondholders to extend their rising debt. Sales dropped 21 per cent that year to $1.9 billion. In 2022, sales recovered by 9.2 per cent to $2.08 billion. In the last quarter, which ended in March, sales rose by almost 8 per cent.

In recent months, Revlon, like many other companies, faced supply chain challenges and higher costs. The cosmetics company reported in March that logistical problems were affecting its ability to meet customer orders. It also said it was hampered by rising prices for key ingredients and persistent labour shortages.

Revlon more agile

CEO Debra Perelman remains optimistic that the company, founded in 1932, will have a happy ending. According to Perelman, Revlon used the pandemic to focus on online sales. For example, the Elizabeth Arden brand started one-to-one virtual consultations. Also, according to Perelman, Revlon has become more agile by cutting back on new product development and is regaining market share.