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Revlon stock jumps on report that the cosmetics company is considering a sale

Key Points
  • Revlon stock jumps on a report the company is reviewing options, including a sale.
  • The company has recently received a $200 million four-year senior secured loan to help fund its business.
  • Bloomberg reports that it tapped Goldman Sachs to explore its financial options.
Daniel Acker | Bloomberg | Getty Images

Shares of cosmetics company Revlon jumped more than 7% after Bloomberg reported that it was retaining advisors from Goldman Sachs to consider a potential sale of parts or all of its business.

A deal has not been reached, but Revlon is exploring all its options, a person familiar with the matter told Bloomberg.

Earlier this month, the company received a $200 million four-year senior secured loan to help fund its business.

The business has been struggling, and the cash was needed to help Revlon innovate and prepare for refinancing other debt it has outstanding. The company, which is majority-owned by Ronald Perelman's MacAndrews & Forbes, has more than $3 billion of debt on its balance sheet.

Last week, it reported its second-quarter net loss narrowed to $63.7 million from $122.5 million a year earlier. But net sales fell 6% to $570.2 million, hurt by sales declines at its smaller brands.

The company's liquidity improved to $260 million, as of last week, from $108 million at the end of the second quarter.

In a May 10-Q filing, Revlon said it had extended the maturity of a $41.5 million loan from April 2019 by a year, and the company also disclosed liquidity dropped below a required threshold by one of its loans.

Even if Revlon is open to being acquired, it is uncertain whether there is a company that would be interested. Others in mass market for color cosmetics have also had challenges, as shoppers increasingly turn to outlets such as Sephora and Ulta Beauty, or online startups such as Glossier, for their products.

Cosmetics distributor Coty acquired Covergirl for $12 billion from Proctor & Gamble in 2015 but said earlier this year that it would write down around $3 billion in assets from P&G. In July, L'Oreal reported a slowdown in North American sales, recording a 1.1% decline.

Revlon's stock has fallen 37% since January and has a market cap of $825 million.

Revlon was not immediately available for comment.