Revlon files for bankruptcy protection 90 years after launching its 1st nail polish

The American multinational cosmetics Revlon reported this Thursday (16) that it has filed for bankruptcy protection in the United States. The company has filed a voluntary reorganization petition under Chapter 11 of the United States Bankruptcy Court for the Southern District of New York – the same appeal used by airline Latam in May 2020.

The so-called “Chapter 11” (chapter 11) is an attempt to recover the company through the renegotiation of its debts, including changes in payment dates and values. It is the last resort so that the company does not go bankrupt, and allows the company to continue operating normally.

“The filing of Chapter 11 will allow Revlon to strategically reorganize its legacy capital structure and improve its long-term outlook, especially amid liquidity constraints caused by ongoing global challenges including supply chain disruption and rising inflation, as well as as obligations to its creditors,” the company said in a statement.

According to the cosmetics manufacturer founded in 1932, the year in which it launched its first nail polish, the company hopes that, after receiving the legal approval to proceed with the recovery, it will be awarded a financing of US$ 575 million (R$ 2, 94 billion) made by a group of creditors. The company has debts of US$ 3.3 billion (R$ 16.8 billion).

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

“Consumer demand for our products remains strong – people love our brands and we continue to have a healthy market position. But our challenging capital structure has limited our ability to deal with macroeconomic issues to meet that demand,” he said.

The operation has PJT Partners as financial advisor and Alvarez & Marsal as restructuring advisor. Legal advice is provided by Paul, Weiss, Rifkind, Wharton & Garrison LLPestá.

In 2021, the company recorded net revenue of US$ 2.078 billion (R$ 10.6 billion), up 9.2% over 2020. In the period, the loss was reduced by two thirds, to US$ 206.9 million ( BRL 1.05 billion). In the first quarter of this year, net revenue grew 7.8% year-on-year, to US$ 479.6 million (R$ 2.45 billion), while the loss totaled US$ 67 million (R$ 342.5 million) , down 30% compared to the same period in 2021.

After the shock of 2020 caused by the pandemic, the global makeup market has been showing growth in all categories, according to consultancy Euromonitor – with emphasis on the consumption of perfumes, which even surpassed the pre-pandemic period.

However, in Brazil, the recovery is still slow, due to the macroeconomic scenario. With the exception of perfumes, whose sale did not fall even with social isolation.

In the world, the sector should register sales of US$ 116.8 billion (R$ 597 billion) this year (up 5% over 2021) and, in Brazil, sales of R$ 36.7 billion (slight increase of 1, 9%), according to Euromonitor. The data takes into account the segments of eye makeup, face makeup, lipsticks and perfumes.

If the founders were called Revson, why is the company Revlon?

Created by brothers Charles Revson and Joseph Revson after the onset of the Great Depression in the United States, Revlon got its name thanks to the letter “L” in the surname of chemist Charles Lachman, who was also associated with the business. The company owns the Elizabeth Arden brand, acquired in 2016.

Its first product was nail polish, followed by lipsticks in 1939. Today the company operates in the hair dye, makeup, cosmetics and perfume segments. The brand is present in around 150 countries and has already had big names in cinema as ambassadors, such as Halle Berry, Emma Stone and Gal Gadot.

In 1985, it was sold to the holding company MacAndrews & Forbes, owned by American investor Ronald Perelman, the company’s current controller. The company went public in 1996.