Revlon Inc has declared bankruptcy after succumbing to debts incurred in its efforts to compete with online-focused upstarts.

In a court statement on Wednesday, the 90-year-old company, known for its nail polishes and lipsticks, stated assets and liabilities ranging from $1 billion to $10 billion.

Revlon, founded in 1932 by brothers Charles and Joseph Revson and Charles Lachman, has lost shelf space and revenues in recent years to celebrity-backed companies such as Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty.

It has also been impacted by supply concerns, which have been exacerbated by the COVID-19 pandemic. Product shortages were another important role in the company’s bankruptcy, and analysts suggested they were unlikely to be rectified in the foreseeable future.

Coty Inc, on the other hand, has gained market share by investing extensively in improving supply.

“Our challenging capital structure has limited our ability to navigate macro-economic issues,” said Debra Perelman, Revlon chief executive since mid-2018 and daughter of Ron Perelman, who owns its controlling shareholder MacAndrews & Forbes.

Revlon began by selling nail enamel and was sold to MacAndrews & Forbes in 1985 before becoming public 11 years later. Revlon bought Elizabeth Arden in a $870 million skincare bet in 2016 to fight off competition. It carries Britney Spears Fragrances and Christina Aguilera Fragrances.

However, the company’s revenues have languished in recent years, falling 22 per cent from 2017 levels in 2021. It also made news two years ago when Citigroup Inc delivered over $900 million of its own funds to Revlon’s lenders by mistake. 

Revlon, which had $3.31 billion in long-term debt as of March 31, said on Thursday that if court clearance is granted, it expects to receive $575 million in debtor-in-possession financing from its existing lender base.

Revlon stock has more than halved since media reports indicated the company was on the verge of declaring bankruptcy.

(Adapted from FinancialPost.com)

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