Revlon Inc.’s bankruptcy filing will not only give the ailing beauty company a chance to reorganize its debt, but could also serve as an opportunity to give its merchandise and marketing a makeover to better appeal to consumers. The iconic beauty company said Thursday that it was voluntarily filing for Chapter 11 bankruptcy, but will continue to operate. Revlon expects to receive $575 million in debtor-in-possession (DIP) financing to support operations.
Revlon
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reported 2021 losses of $206.9 million on sales of $2.079 billion. The Wall Street Journal broke down the company’s mountain of debt and other liabilities totaling $3.8 billion, which included a debt maturity in September 2023 that involved an $866 million loan that was accidentally paid off by Citigroup Inc.
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with the bank’s own money. Some lenders returned the money, but others kept $500 million of the payment. “Revlon has an unsustainable capital structure with reported debt exceeding 1.5x of annual revenue that left the company with limited financial flexibility, including high leverage, weak liquidity and looming maturities,” said Dawei Ma, an analyst at Moody’s. “Moreover, the company is facing supply chain disruptions, high inflation, intense competition from many successful larger competitors and rising interest rates on its heavy debt burden, partially offset by improved end-market demand as consumers resume more out-of-home activities and the company’s cost saving initiatives.” Kelly Hyman, founder of The Hyman Law Firm, said Revlon’s iconic status will be useful as the company works its way out of bankruptcy and plays catch up with other, fresher brands that have tapped into what customers want. “Consumer tastes and buying habits are changing significantly and yesterday’s iconic brands will be tomorrow’s nostalgic memories unless they significantly re-tool, become more limber financially and align with consumer taste and purchase patterns,” Hyman told MarketWatch via email. “Against the backdrop of Revlon’s heavy debt load, upstart brands are in the ascendancy — from those created by members of the Kardashian clan to luxe names such as Charlotte Tilbury.” Beauty brands, and the famous names behind the …