Dividends and Revlon files for bankruptcy as competitin from online, supply issues take their toll

Most of us live in a bit of a bubble and how you try to stay in or out of the bubble defines your reactions to the news of the world and for your investments business news. In our bubbles we hear or know it about some companies because they were in many advertisements.

In an article by Praveen Paramasivam, Maria Ponnezhath, and Dietrich Knauth of Reuters, if you look through a fashion magazine you likely seen ads for nail polish and lipstick by Revlon. You may or may not have the brands in your household, but given Revlon filed for bankruptcy it is likely other brands.

Revlon was founded in 1931 by Charles and Joseph Revlon and was sold in 1985 to its present owner MacAndrews & Forbes whose Chair is Ron Perelman. Mr. Perleman’s daughter Debra is the present chief executive officer.

According to Tomai Serdari, a marketing professor at New York University, in the fashion industry there is a constant need to offer the hype of the consumer and its brands are a little older and not offering the hype for young consumers.

In the global supply issue, Revlon has been hit hard as the shelf space were empty. This has resulted in the compeitition including Covergirl owner Coty gaining market share.

The last acquisition Revlon made was buying Elizabeth Arden in 2016 whose brands include fragrances by Britney Spears and Christina Aguilera.

Revlon has long term debt of $3.31 billion. Two years ago, Citibank accidentally sent near $900 million of tis own money to Revlon’s lenders. Revlon is in court trying to get back the money.

Linking to dividend paying stocks, there are many companies and some in the fashion business operate on why is cool and hype for this season. There are profitable companies in the space, but it is easier to make money buying a business in which is boring and generates cash to make profits to raise dividends over the years. If you buy an investment which depends on hype, ensure you are connected to the target group, else it is easier to find boring but profitable businesses.

There are more questions than answers, till the next time – to raising questions.


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