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Revlon Avoided Bankruptcy. Now What?

"We want to ensure they are getting the products they need, want and desire."

Revlon Inc. successfully avoided bankruptcy in 2020, but as the company moves into 2021 and the coronavirus pandemic ensues, there are several more hurdles to clear. 

There’s more debt to refinance, but there’s also the need to accelerate growth across a brand portfolio that was hit hard during the pandemic. 

Revlon posted $477 million in net sales for the quarter ended Sept. 30, a 20 percent year-over-year dip. For the nine months ending Sept. 30, net sales declined more than 25 percent, to $1.27 billion.

Elizabeth Arden, which until 2020 had been the bright spot in the business, also saw significant sales declines. For the three months ending Sept. 30, Arden’s sales were down almost 14 percent year-over-year, to $106.3 million. For the nine-month period, sales dipped nearly 20 percent, to $282.4 million.

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Revlon’s newly appointed chief marketing officer Martine Williamson said that COVID-19 “has accelerated the transformation plan that Revlon had already begun executing in 2020.” 

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Over the course of the year, Revlon made many moves, including restructuring its executive team. Serge Jureidini, the former chief marketing officer, and Silvia Galfo, former global brand president for the Revlon brand, were out. Former Revlon executive Williamson, who also worked at Topix Pharmaceuticals and Glansaol, an early beauty incubator that went bankrupt, was in. 

The business also went through furloughs during COVID-19, planned layoffs and several rounds of debt negotiations during the year.

Going forward, Williamson said Revlon plans to “double down on key initiatives,” which will include growth in Asia, especially China, as well as skin-care and e-commerce sales. 

But critics say a modernization effort is needed for Revlon’s products to succeed with consumers. 

The Revlon brand has stayed true to the celebrity spokesmodel formula for years, even as other brands shifted towards promotion via social media influencers and user-generated content, according to Coye Nokes, a partner at OC&C Strategy Consultants. In August, Revlon hired Megan Thee Stallion as a brand ambassador.

“It feels like what they are doing is quite an old strategy,” Nokes said. “Get the celebrity endorsement, put them all over your ads. That worked for a while. Now, a lot of what’s appealing to consumers is hearing about it from other consumers.”

Williamson said Revlon is “pivoting to working more nimbly and effectively across functions,” in terms of marketing, and that she plans to use the digital experience she gained at start-ups to inform the digital and e-commerce strategies of the Elizabeth Arden and Revlon brands.

“This is already underway as we evolve our marketing function to focus on market-specific needs as part of our continued effort to get closer to our consumers,” Williamson said. “Ultimately, we want to ensure they are getting the products they need, want and desire — and I believe that will strengthen our leadership in the global beauty market.”

In order to make progress in 2021, Revlon will not only need to reach consumers, but will also need to safeguard liquidity, according to Debtwire restructuring editor Reshmi Basu.

“They were able to stave off a filing [in 2020] — that’s positive — but I wouldn’t say they exactly engendered goodwill across the lender and bondholder group,” Basu said, referencing debt deals Revlon made that alienated the lending community, including one where the company moved intellectual property out of certain lenders’ reach.

More refinancing for the business lies ahead. The company has several different maturity dates in July and September, and has said in SEC filings that it anticipates refinancing those loans.

“The capital structure is still going to be a front-and-center issue with them. It’s not as if all their balance sheet issues have been solved. They’ve gone a long way in working towards it, but a couple of the deals that they’ve done … there’s definitely investor ire in how these deals were done,” Basu said.

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