Updated: Oct 21, 2022
On October 20, the Review Committee of the New York Stock Exchange’s regulatory commission rejected Revlon’s appeal and required Revlon to delist its Class A common stock, and has now suspended trading in the group’s shares.
By the end of the suspension, Revlon shares plunged 5.34% to $3.90, with a total current market capitalization of approximately $211.7 million.
As early as Nov. 11, 2020, L’Oreal was on Weibo for “filing for bankruptcy”, which triggered a rush in the Chinese domestic market at that time. However, two days after the news broke, the company was temporarily exempted from filing for bankruptcy because it had received the support of bondholders to eliminate a key debt. At that time, the company also said that it was trying to sell its brands to repay a senior loan. The company also formally filed for bankruptcy protection in the U.S. court in June this year. The bankruptcy reorganization of Revlon is still underway. Revlon has said in previous announcements that the bankruptcy reorganization does not mean the closure of the company and that it will not sell or dissolve any of its brands at this time.
For this restructuring, Revlon said it can help it strategically restructure and repair its legacy capital structure to improve its long-term growth prospects in the face of ongoing global challenges (supply chain disruptions and rising inflation) and liquidity constraints on its lenders’ debt.
According to Revlon’s previously announced 2022 interim results, in the first half of this year, its net sales were $922 million, down 2.14% year-over-year, and its net loss was $343 million, a 109.29% expansion in losses.
The defeat of Revlon has long been evident in the Chinese market.
It withdrew from the Chinese market in 2013 then it announced its return in 2016 under the name of Tmall’s overseas flagship store. It opened a Tmall flagship store in 2019, and then fell into “bankruptcy” in 2020. To this day, Revlon has been losing money year after year, and even faces high debt.
According to financial data, since its return to the Chinese market in 2016, Revlon has been losing money for six consecutive years. In recent years, Revlon’s gearing has also gone way up. For example, from 2019 to 2021, Revlon’s gearing ratio will be 135.03%, 173.66%, and 182.8%, respectively.
Revlon President and CEO Debra Perelman also publicly stated last March that we will continue to execute strategic initiatives to drive growth for our iconic brands, Revlon and Elizabeth Arden, and to accelerate our e-commerce business in key markets such as China.
Revlon has little room left to survive under the double squeeze of international beauty giants and upstart Internet brands. Coupled with external inflation and supply chain pressure, Revlon’s walk into bankruptcy may be a foregone conclusion.