Revlon needs a company makeover; seeks help of Goldman-Sachs
Mary May | On 05, Aug 2019
We all know Revlon as the famous American beauty and cosmetics company. Founded in 1932, they have since acquired many brands and expanded their label. However, in the recent years, they have failed to sustain popularity and sales by failing to keep up with other brands that self-popularized using the internet. Now, the beauty company is subject to a complete makeover.
The task is to look for strategies for the cosmeceutical company that will help improve the company’s sales. For this, Goldman Sachs Group Inc. is retained as Revlon Incorporated’s financial adviser. This has made Revlon’s shares jump for more than 7%, as reported by Bloomberg. Revlon is currently backed by MacAndrew & Forbes’ Ronald Perelman. Other investments of the holding company include Gillette, Four Star, RetailMeNot, and Coleman Company, among many others.
Revlon is currently under intense pressure from other competitors to boost its sales.
It is reported that Revlon is exploring alternative strategies. A Goldman Sachs representative has confirmed that Revlon hired the bank but have declined to give more details regarding the deal.
In the past few years, it has been a struggle for Revlon to keep up with all the cosmetic noise as opposed to their Estee Lauder, their major competitor, and other beauty companies that made use of social media and the internet to boost their popularity. The company has since suffered plummeting sales because of this.
According to Revlon, their liquidity is at around $107.5 million which includes the unrestricted cash of $63 million as of the 30th of June. As of the 6th of August of this year, liquidity has since increased to $260 million.
Currently, Revlon carries up to 15 brands across 150 countries; this includes brands like Elizabeth Arden and Elizabeth Taylor. Meanwhile, Revlon’s current debt is over $3 billion which is due beginning 2020. Recently, Ares Management Corporation has lent the cosmetics company a whopping loan of $200 million which ultimately drops to $187 million post fees. This should be used to aid the brand’s makeover plan.
In 2016, Revlon expanded by trying to acquire the Elizabeth Arden brand for the price of $419 million but the odds weren’t in their favor. During the 2nd quarter, there has been a sales increase of 10.7% from their skin care products. Hopefully, this will make up for the struggles of the brand since the departure of chief executive officer, Fabian Garcia.
Currently, Revlon faces a good amount of debt from the present year up to the year 2021. Standard and Poor’s or S&P 500 continues to foresee a negative future for the company. They predict that if the company wouldn’t be able to refinance before February 2020, there will be a downgrade risk for Revlon.
Recently, President and CEO of Revlon, Debra Perelman said that they are pleased with the growth of the company’ brands, as well as their continued momentum. She also adds that significant reductions in the cost and new investment strategies will be part of the plan.