I distinctly remember getting off the school bus in 8th grade. My friends and I headed towards the drug store with whatever money we had from pet sitting or chores. We would spend hours in the makeup aisle picking the one thing that we liked (and could afford with our change)!
Revlon was one of our favorite brands. Colorful lip products and eye shadows would interest any 13-year-old. Now, at 21, I still love Revlon products. Affordable and good quality – how could you go wrong? Well, something went wrong somewhere. Revlon filed for bankruptcy on June 16th, 2022.
The first thing I thought when reading that headline was “No way.” I hadn’t seen anything about Revlon struggling and I know many people, including me, who still wear their products. So, what happened?
The reason is a bit crazy. It was not solely due to sales. Debt and supply chain issues were the biggest components of this decision.
The debt issue is primarily due to a big mistake. In 2020, Revlon’s bank Citigroup accidentally sent almost $900 million to their debt holders. This was never supposed to be paid in full and they had years left to slowly pay it off. Citigroup quickly began sending message after message to lenders saying “Oops! That wasn’t supposed to happen, please give us the big chunk of change back.” To no one’s surprise, quite a few of the lenders didn’t want to send money back. Less than half was repaid. This became a legal case.
Citigroup took the lenders to court, fighting about whether the lenders legally had to pay back Citigroup for the mistaken payment. The verdict was “no,” lenders can keep all the money they received. So, Revlon is now out $500 million.
However, that was not the only thing that led Revlon to bankruptcy. Revlon sales have been decreasing since 2017 and the pandemic didn’t help. Along with the supply chain disruption issues in getting key ingredients for Revlon’s products, it was all too much.
Revlon made the decision to file for Chapter 11 bankruptcy. Chapter 11 means this isn’t the end of Revlon, but will lead to the revamping and reorganizing of this 90-year-old brand. So despite this setback, I bet in a couple of years some middle schoolers will still be checking out Revlon lipsticks and eyeshadows at their neighborhood drugstore.