Cosmetics maker Revlon has filed for bankruptcy in the US as supply chain disruptions have pushed up raw material costs for its products.
The 90-year-old company says it’s also struggling with supplier payments, inflation and labor shortages.
The company expects to raise $575 million (£466.6 million) from its existing lenders to support day-to-day operations.
Its shares fell more than 13% in New York trading following the announcement.
In a court filing, the company said supply chain disruptions had led to intense competition for the ingredients used in its cosmetics. It added that suppliers have also asked to be prepaid for orders.
This has “resulted in a lack of necessary ingredients across the company’s portfolio,” Revlon’s chief restructuring officer, Robert Caruso, said in the filing.
“For example, a tube of Revlon lipstick requires 35 to 40 raw materials and ingredients, each of which is critical to bringing the product to market,” he added.
- Asos buyers return more often as prices rise
- Women have been wearing makeup less since the pandemic
In addition to the Revlon brand, the company also owns well-known names such as Elizabeth Arden, Almay and Cutex, as well as fragrances by Christina Aguilera and Britney Spears.
In recent years it has faced increasing competition from new brands endorsed by celebrities such as Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty.
By filing for Chapter 11 bankruptcy protection in the United States, Revlon will be able to continue operating while it works out a plan to repay its creditors.
Debra Perelman, Revlon’s president and chief executive officer, said filing for bankruptcy will allow the company “to offer our customers the legendary products we’ve delivered for decades, while providing a clearer path for our future growth.”
However, the New York Stock Exchange said on Thursday that it had begun removing the company’s shares from its platform.
Revlon was founded in 1932 by brothers Charles and Joseph Revson and Charles Lachman and began selling nail polish shortly thereafter. By the mid-1950s it had become an international brand.
It was bought by MacAndrews & Forbes in 1985 from billionaire businessman Ronald Perelman. Revlon now sells its products in more than 150 countries.
Earlier this year, Revlon warned that it was facing “liquidity constraints due to ongoing global challenges, including supply chain disruptions and rising inflation.”
At the end of March, the company had $3.3 billion in long-term debt, and reports last week of its imminent bankruptcy caused its share price to fall.
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