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Revlon calls for bankruptcy protection as supply chain troubles worsen

Revlon calls for bankruptcy protection as supply chain troubles worsen
Revlon calls for bankruptcy protection as supply chain troubles worsen

Revlon Inc., a U.S.-based cosmetics behemoth, has declared bankruptcy and has blamed worldwide supply chain disruptions for driving up raw material costs and forcing vendors to seek upfront payments.

The 90-year-old brand, which is known for its nail polishes and lipsticks, has also been losing physical space and revenues to celebrity-owned startups such as Rihanna's Fenty Beauty and Kylie Jenner's Kylie Cosmetics.

Revlon said in its bankruptcy filing that supply chain interruptions during spring led to fierce competition for chemicals used in its products. At the same time, vendors who had previously granted up to 75 days for payment have now begun demanding cash in advance of new purchases, further adding to the company's woes.

In a court filing, Revlon's Chief Restructuring Officer Robert Caruso stated that one tube of Revlon lipstick contains 35 to 40 raw ingredients and parts, where each part is crucial to bringing the product to market. He also further mentioned that with key ingredients in limited supply across the company's portfolio, bidding for any accessible supplies becomes fierce.

Since 2020, the COVID-19 pandemic has increased freight prices by lengthening ship delivery times, while the Russia-Ukraine crisis and Shanghai lockdowns have increased supply chain disturbances this year.

Revlon's stock dropped as much as 44% after the bankruptcy filing on Thursday, before closing down to 13%.

Revlon intends to use USD 575 million in debtor-in-possession borrowing from its existing lender base to fund its bankruptcy case. In a recent court filing, it listed more than USD 3.54 billion in liabilities. The company has mentioned that except for Canada and the United Kingdom, none of the corporation's international units are involved in the Chapter 11 bankruptcy proceedings.

Despite the bankruptcy, Mittleman Brothers Investment Management, which owns around 3% of the company's stock, expressed faith that equity holders would receive a fair payment. Chris Mittleman stated that this could happen if Revlon can manage stronger sales that allow them to overcome supply chain challenges.

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Vinisha Joshi

Vinisha Joshi

Despite graduating with an engineering degree in electronics and communication, Vinisha Joshi chose the road less travelled, and decided to pursue her career in content writing . Currently, she pens down articles for and a few other distinguished news platforms, pertaining to business and finance.