Cosmetics giant Revlon Inc. is preparing to file for Chapter 11 bankruptcy as soon as this week.
The company’s decision to consider bankruptcy follows its struggle to compete with established brands such as Estee Lauder as well as several other emerging brands, according to people close to the matter.
Revlon has also been challenged with a decline in sales, in addition to supply chain problems and a heavy debt load.
On a May 2022 earnings call, Revlon’s Chief Executive Officer, Debra Perelman, revealed that the company’s products showed continued strength, but supply chain challenges were putting pressure on its ability to meet demand. Perelman also noted that inflation was putting a dent in margins.
Revlon is said to have more than $3 billion worth of long-term debt, and over time the company has avoided multiple defaults by cutting deals with creditors. As a result, the company’s annual interest expense reached nearly $248 million last year, leaving just $132 million in liquidity as of March 31, 2022.
Following reports of its upcoming chapter 11 bankruptcy on Friday, Revlon saw its shares plunge 53%, closing at $2.05, recording its most significant one-day drop to date.