What went wrong?
Cosmetics company Revlon has filed for bankruptcy in the U.S.
It’s not quite the end of the line for the 90-year-old brand, which says it expects to be able to continue operating at least in the short-term.
So, why has it been struggling?
What is bankruptcy?
In general, bankruptcy is a legal process to resolve a situation where a person or business is unable to pay back its debt.
Revlon has filed for ‘Chapter 11 Bankruptcy’, a type of bankruptcy in the U.S. where the business in debt must come up with a plan to ‘reorganise’ the company, but can continue to operate and can sometimes borrow more money with a court’s approval.
Revlon says it expects to receive $US575 million from lenders and CEO Debra Perelman said it would offer “a clearer path” for the company’s future.
Revlon was founded in 1932. It soon became a dominant player – Revlon and its main rival Avon accounted for more than half of all lipstick sold in the U.S. in the 1960s.
In 1970, it became the first cosmetics company to feature a black model, and in the ’80s was considered an industry leader in the use of celebrity “supermodels” for marketing.
However, it has struggled to adapt to a changing beauty market where beauty influencers have increasing power.
By 2021, it had fallen to 22nd on the list of biggest-selling beauty brands. It sold $US2 billion worldwide (including sales of Elizabeth Arden, which it has acquired).
By contrast, the top four beauty brands – L’Oréal, Unilever, Estée Lauder, and Procter & Gamble – each sold more than $US10 billion. L’Oréal sold $38 billion. Notably, all four had also grown sales since before the pandemic, whereas Revlon had fallen 14%.
Its decline has been linked in part to Revlon’s slowness to adapt to competition from influencer-led brands, including Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty.
In an interview in 2021, Perelman recognised celebrity brands had managed to “really resonate with the consumer” but said she believed they had “helped” Revlon by encouraging them to focus more on online sales.