Smoky

Makeup mainstay Revlon files for bankruptcy protection — and other debt-plagued darlings could follow

Friday, June 17, 2022 by Robinhood Snacks |

Should’ve gone with waterproof mascara… for the Chapter 11 tears. Cosmetics giant Revlon officially filed for bankruptcy protection yesterday. Decades ago, Revlon was the second-largest beauty company and the first to feature a Black model. But when people ditched matte lipstick for masks in 2020, the 90-year-old biz barely avoided bankruptcy. Even though cosmetic sales are nearly back to pre-pandemic levels, things have gotten worse at Revlon:

  • Difficulty level = winged eyeliner: Revlon can’t fill a third of its orders (#supply-probs) and has $3.3B in debt to boot. Sales ticked up last quarter, but it’s still losing $$.
  • Kiss and makeup: Now Revlon expects $575M from lenders to save its brand, which it says is still in demand.

Killed by Kylie… For decades, Revlon has sold most of its makeup in drugstores and malls. But the new generation discovers products on TikTok, not at CVS. Now Revlon is losing customers to glossier names: the “tap to buy” trend has helped online-first brands like Kylie Cosmetics, Glossier, and Rihanna’s Fenty Beauty. Gen Z favorite E.L.F. crushed sales expectations last quarter thanks to social collabs with brands like Dunkin’.

Even fellow legacy brand Estée Lauder is faring better than Revlon (and is profitable), partly thanks to ecomm investments like viral skincare brand The Ordinary.

THE TAKEAWAY

You can’t conceal billions in debt… Revlon was the first major brand to file for bankruptcy this year, but likely won’t be the last. Last year, nonfinancial US companies took on a record $1.7T of debt when interest rates were near zero. Now soaring interest will make it pricier for cash-strapped companies like Peloton, Affirm, and Just Eat to pay back IOUs.