Revlon Files Bankruptcy

What is your favorite summertime beverage

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Revlon was founded in 1932 by the Revson brothers and their chemist, Charles Lachman (that is the L in Revlon) during the height of the great depression. Their signature product was nail polish. Lachman’s brilliancy was using a pigment instead of a dye and they invented nail enamel. It became an instant success and later on they expanded to lipstick. At one point, Revlon was the #2 makeup brand in the world. After the war, they bought a German implement company that was seized by the government and that is how they got into the implement business.

Then 1985 came and the beginning of the end of Revlon began. That is when Ron Perelman bought the company and saddled with with $2.7B in debt. Then over the years he made some poor acquisitions. He paid $660M for the Colomer Group which included the American Crew and Creative Nail Design brands. Then he paid $870M for Elizabeth Arden in 2016. What is interesting about these acquisitions: Revlon bought Jean Nate in 1935 (remember that brand, it was hot for so many years). From its roots, Perelman thought it best to expand its nail polish and fragrance offerings and always used debt.

Fast forward to now and guess what? Revlon blames its conditions on supply chain, inflation, the war, and other factors. But the bottom line is that is still has more than $3B in debt, slightly more than in 1985. Debt killed the company and Perelman killed a company 90 years old. Now the company is nearly worthless valued a little over $100M. How much do you think Colomer Group and Arden are worth now?

Reliance Industries, a huge energy outfit in India wants to get into the beauty game and is thinking about buying Revlon. Revlon stock zoomed up on the news. But once Reliance does its due diligence and finds out what the brands are really worth, they would be best to walk away. Sure the brands are a steal at these prices but when the last time anyone bought a bottle of Revlon nail polish?

On a side note, I wonder how KKR is doing with OPI. With inflation at 8.5% and supply chain issues still going on, why is OPI discounting its core offering 25%? And just last Friday, SBH (Sally) got downgraded because its low income consumers will cut back on purchasing and the analyst specifically mentioned the manicure category. The stock sunk to just over $11 a share.

Meanwhile, the entire nail category accounts for less than 2% of overall beauty sales. It was always a niche category and always will be. Those that try to make it anything else always get stung in the end.

Out Of My Mind On A Monday Mornin’

47 million turkeys were sold for Thanksgiving. Will you buy one next year?

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Wow, what a Thanksgiving weekend. Two sons, their wives, three grandkids made for an eventful time indeed. What memories forget or don’t include: Countless water bottles, some with two sips, some half-empty and some empty, none put in the garbage can; coffee cups some half-full, some empty, scattered wherever; empty toilet paper rolls and Kleenex boxes; laundry machine non-stop; empty bourbon bottles that magically emptied; toys everywhere, most used once; and let’s not even talk about the fridge. Worse culprits: Not the grandkids, but the adults!

We also decided this was the end of turkey, stuffing and veggies no one wants to eat. Friday and Saturday no one wanted leftovers and by the time we got to them on Sunday, neither did we. Oh well, a new tradition will start in 2019.

Sorry but it’s tough to be a state of MI sports fan. The Lions proved inept against the Bears and the Wolverines were embarrassed playing the BIG GAME. Worst loss in Wolverine’s history against OSU. Spartans barely won but I was rooting for Rutgers. Going downtown for the worthless and useless bowl game is so much closer. As they say, at least there is basketball. . . .

Conde Nast, publisher of many magazines including Allure, Vogue and Vanity Fair decided to stop publishing Glamour and keep it online only. Glamour was a top 5 magazine back in the day. Millennial’s, X, Y, and Z’s no longer look to magazines to make their beauty decisions, it’s all about Instagram.

CND’s Vinylux is the latest pro brand to go retail. Huge in-line displays at CVS and other retailers.

Black Friday, Cyber Monday and iPhones. What do they all have in common? Give 25%, 50% and even 75% discounts, and consumers will buy now versus later. Apple recently announced its worst sales of its flagship product in history and only through huge incentives can they move their new XR models. I was at Dick’s on Friday, the entire store was 25% off. They had customers but even at 25% off, it wasn’t a big deal. The other thing is, what happens when you go to mall and don’t find anything to buy? This increasing phenomenon is very scary as the generations I mentioned earlier are more interested in experiences than products. And what is one of the most popular Christmas songs ever? “All I want for Christmas is you.”

Coty has a new CEO and Sennen Pamich, formerly of Revlon, is now an executive. Coty hasn’t made money in more than two years, has $7B in debt and it’s stock is at an all-time low. Can Coty be turned around as P&G unloaded an overpriced asset or will the Clairol/Wella deal prove to be too much?

GM is closing 5-7 factories and laying off more than 6,000 workers; Ford stopped making sedans; Nissan CEO accused of tax fraud in Japan and is in jail. Carlos Ghosn is out at Nissan, Mitsubishi and pending fate at Renault. This while Jeep unveils its first pickup truck since 1992.

Can someone tell me this: What happens when everything is delivered to your home or business within two hours? You know that is the way the world is going. Target is advertising same day delivery paying a fortune to use their stores as warehouses. Amazon already offers this service in many urban areas. But think about this, if the surviving retailers all offer free shipping and two hour service, what will the differentiators become?

Happy Monday!