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image source, Reuters
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After decades as one of the world’s leading cosmetics companies, Revlon filed for bankruptcy in the United States on Thursday.
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Its executives assured that the debt restructuring process will allow it to continue serving the market without ceasing its operations.
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“Today’s statement will allow Revlon to offer our consumers the iconic products we’ve delivered for decades, while also providing us with a clearer path for our future growth,” he said. Debra Perelmanexecutive director of the company.
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The company announced that, after receiving the approval of the courts, it will access US$575 million from its financiers to continue its production.
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Earlier this year, Revlon warned that it was facing “liquidity constraints brought about by ongoing global challenges, including supply chain disruption and rising inflation.”
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At the end of March tenía US$3.3 billion long-term debtand reports of its impending bankruptcy last week sent its share price plunging.
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image source, Getty Images
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Currently, its products are sold in more than 150 countries, although its position in the market has suffered a clear setback. From being one of the top cosmetics brands in the world, it now sits at 22nd place.
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These are some of the reasons behind the bankruptcy declaration of this iconic brand.
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Emergence of new competitors
Revlon’s backsliding began in the 1990s, when the company failed to adapt to changing consumer preferences who were then beginning to opt for more opaque shades of lipstick instead of bright red.
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This gap opened up opportunities that their competitors knew how to take advantage of.
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Revlon has been losing market shares not only to traditional rivals but also to the emergence of new brands driven by well-known personalities such as Fenty Beautyby Rihanna, o Kylie Cosmeticsthe Kylie Jenner.
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image source, Getty Images
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supply chain issues
In addition, Revlon claimed that supply chain disruptions caused an internsa competition for the ingredients used in cosmetics.
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Faced with this situation, suppliers requested that orders be paid in advance.
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This has caused “shortages of the necessary ingredients in the company’s portfolio,” said Revlon’s restructuring director, Robert Caruso, according to bankruptcy documents filed with US courts.
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“For example, a tube of Revlon lipstick requires 35 to 40 raw materials and components, each of which is critical to bringing the product to market,” he added.
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Revoln, like other companies around the world, was also affected by a shortage of employees.
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Also, their sales fell and 21% in 2020 and, although during the last year they recovered by 9.2%, their income is still about US$2.4 billion below what it registered before the arrival of covid-19.
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image source, Getty Images
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Image of a Revlon store in Paris in 1979. By 1950, the company had become an international brand.
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an international brand
Revlon was founded in 1932 by brothers Charles y Joseph Revson beside Charles Lachman.
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Soon after, it began selling nail polish, and by the mid-1950s it had become an international brand.
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In 1970 it broke racial barriers by being the first beauty company to hire a black model: Saomi Sims.
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In the decade that followed, he shook up the beauty market by tapping both established models and rising stars for his advertising campaigns, featuring models like Iman, Cindy Crawford o Claudia Schiffer.In 1985, it was bought by MacAndrews & Forbes, the firm of billionaire businessman Ronald Perelman.
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