Revlon avoids bankruptcy, reports 20% decline in sales
New York-based cosmetics company Revlon, Inc. announced on Thursday that it no longer expects to make a filing for Chapter 11 bankruptcy, thanks to a last-minute debt deal.
Earlier this month, the beauty group reported that it could be pushed to seek bankruptcy protection if bonds worth $342.8 million were still outstanding by mid-November, a situation which would have led the repayment of the company’s other debts to be accelerated.
However, holders of approximately $236 million, or 68.8%, of these outstanding bonds have now entered into an exchange offer with Revlon. The company offered them either 32.5 cents on the dollar in cash for their bonds, or a combination of cash and new debt.
According to Revlon, this deal is sufficient for it to consider that any bankruptcy or insolvency proceedings are unnecessary at the current time.
On Thursday the company also reported its financial results for the third quarter ended September 30, 2020. Net sales in the period totaled $477.1 million, down 20.1% year over year, compared to $596.8 million. This decline was largely due to the negative impact of the Covid-19 impact, which was partially offset by a 13% increase in sales in the group’s e-commerce business.
Sales in the company’s flagship Revlon segment, which is comprised of its namesake cosmetics brands, decreased 23.6% to $166.0 million in the quarter. This reflected a 13.6% decline in North America and a 32.1% decrease in international revenues, which were strongly affected by falling sales of color cosmetics and professional haircare products.
In the Elizabeth Arden segment, revenues fell 13.7% to $106.3 million, with North American and international sales decreasing 3.4% and 19.1%, respectively.
The company’s portfolio segment, which includes the Almay, SinfulColors, American Crew and CND brands, reported net sales of $99.6 million – a 15.7% year-over-year decline – while the company’s fragrances segment saw a decrease of 23.8% in its revenues, which totaled $105.2 million.
“While Covid-19 continues to have a significant impact on both the beauty industry overall as well as on our business, I am pleased that our third quarter 2020 results reflected a sequential improvement in our net sales decline versus the prior quarter,” commented Revlon president and CEO Debra Perelman in a release.
Overall, Revlon’s third-quarter net loss came to $44.5 million, or $0.83 per diluted share, compared to a loss of $44.7 million, or $0.84 per diluted share, in the prior-year period.
Taking into account the first two quarters of the fiscal year, the company’s revenues totaled $1.28 billion year to date, down from $1.72 billion in the same period in the previous year. Net loss in the nine-month period was $385.2 million, or $7.22 per diluted share, down from a loss of $183.5 million, or $3.46 per diluted share.
Revlon has not provided financial guidance for the fourth quarter or the full fiscal year.
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