While many in beauty have had a stellar 12 months with makeup finally joining skincare and fragrance for a post-pandemic sales recovery, there have also been some pretty significant downs (Revlon‘s bankruptcy, Amyris’ bankruptcy, Estée Lauder‘s tanking stock price, and more).
The blemishes are outside of beauty’s norm. For years, the category has gone from strength to strength, growing even within the downtimes as consumers treat themselves to more-affordable-than-fashion lipsticks, mascaras and face creams. In 2023, most of beauty’s issues were driven by company-specific problems compounded by fallout from the COVID-19 pandemic or the economic slowdown in China.
Starting the negative trend was Revlon, which spent the primary few months of the 12 months stuck in bankruptcy proceedings after filing for Chapter 11 in 2022 amid a hefty pile of debt.
Revlon had been controlled by Ronald Perelman’s MacAndrews & Forbes since he took it over via hostile takeover within the ’80s. For years, he used the brand to catapult himself into the worlds of society, fashion and Hollywood, but problems escalated in 2020 through the COVID-19 pandemic.
The business, the parent company of the Revlon brand, Almay and Elizabeth Arden, emerged from Chapter 11 bankruptcy after just below a 12 months in May, with a recent owner, recent board and billions less in debt.
It also parted ways with the Perelmans: Ronald Perelman stepped away as a part of bankruptcy negotiations, while his daughter Debra Perelman exited as CEO in August.
Debra Perelman
Courtesy Image.
In her place, Avon veteran Elizabeth A. Smith was appointed interim CEO. She was brought in as executive chair of the Revlon board of directors in May and continued in that role because it emerged from Chapter 11 bankruptcy.
But while Revlon was exiting Chapter 11 proceedings, one other company was preparing to enter.
Amyris, a onetime biotech darling that sought to vary the wonder industry with progressive and sustainable ingredients and later moved into brand incubation, filed for Chapter 11 bankruptcy in a Delaware Court in August.
As a part of the proceedings, it put several of its brands up on the market. Recently, 4 of those were sold at auction: Skincare brand Biossance was sold to online beauty retailer THG Beauty, formerly often called The Hut Group, for $20 million; Scent Theory Products paid $600,000 for 4U By Tia; Dr. Reddy’s Labs paid $3 million for Menolabs; and HRB Brands paid $1.75 million for clean baby care brand Pipette.
Reese Witherspoon as a Biossance Global Brand Ambassador.
Photo courtesy of Biossance
Then, there was the Estée Lauder Cos., which after years of rapid growth underwent a slowdown. The owner of Clinique, Mac, Jo Malone and Tom Ford saw its share price nosedive this 12 months as a result of declines in its China and travel retail businesses, in addition to increasing competition.
In November, Lauder lowered its full-year forecast once more as troubles in its China business proceed, combined with the potential risks of further business disruptions in Israel and other parts of the Middle East. Net sales for 2024 are actually forecasted to range between a decrease of two percent and a rise of 1 percent versus the prior 12 months, after previously anticipating an increase of between 5 percent and seven percent. Adjusted diluted net earnings per common share are expected to diminish between 33 percent and 25 percent.
The news sent its share price down by around 19 percent to shut at a six-year low of $104.51. For the reason that starting of the 12 months, the stock has fallen greater than 50 percent.
Share declines have also sparked speculation about what could occur to the corporate, with some analysts calling for a management change and a shift away from longtime CEO Fabrizio Freda, who joined in 2008 and oversaw a protracted period of growth. A shift would require the Lauder family’s approval (they’ve a 35 percent stake in the corporate, including supervoting shares).
Fabrizio Freda
Mark Mann/WWD
An alternate option, said multiple sources, can be so as to add a chief operating role to the C-suite and put a more gradual succession plan in place.
Beyond management changes, the troubles have brought into query Lauder’s future on the general public markets, including delisting the corporate, although that is seen as unlikely. Other scenarios involve M&A, with L’Oréal and LVMH being put in the combo, although either could spark antitrust concerns.
There’s also the chance that an activist investor could become involved. In May, reports swirled that Nelson Peltz was considering making Lauder his next play.
Elsewhere on the general public markets, trouble brewed at multiple beauty businesses which had gone public prior to now few years.
Waldencast, which has just two brands on its roster — Milk Makeup and Obagi Skincare — revealed that it was at risk of being delisted from the Nasdaq, after joining in summer 2022 through a special purpose acquisition company (also known as a SPAC).
Milk Makeup
Courtesy of Sephora
The corporate received a written notice from Nasdaq indicating that it was subject to delisting as a result of it not having filed its annual report with the Securities and Exchange Commission.
In response to a slew of regulatory filings, the problem appears to stem from skilled skincare company Obagi Skincare, which Waldencast purchased from Haitong International Zhonghua Finance Acquisition Fund in 2021.
The corporate was as a result of report fourth-quarter earnings and an annual report on March 15, but on April 25, it said it was delaying filing due to an ongoing review of its year-end 2022 financial statements and related issues, namely with Obagi. It further explained that the review arose from “concerns regarding the lapse in renewing the importation licenses in Vietnam, that are still pending, and related effects, triggering, amongst other things, the necessity for further evaluation.”
Olaplex — which just just a few years ago was celebrated as a successful IPO — has also struggled. After constructing a cult following for its bond-building products, the corporate hit a rough patch amid increased competition and a since-dismissed lawsuit during which several plaintiffs claimed they’d sustained personal injuries to their hair and scalp, including hair loss and damaged hair, something the corporate has vehemently denied.
Olaplex’s Oladupé bottle.
Photo courtesy of Olaplex
But in October, Olaplex appointed Amanda Baldwin CEO (from Supergoop, where she was CEO and helped construct the business right into a sunscreen empire). JuE Wong, who joined the business in 2020, departed.
Andrew Stanleick also departed publicly listed Hydrafacial owner BeautyHealth as president at the identical time that the corporate revealed lower-than-expected U.S. revenue and $63.1 million in restructuring charges related to device upgrades of early generation Syndeo Hydrafacial devices.
The indie beauty world faced troubles too, with several start-ups closing down amid rising costs and increase competition, including men’s nail polish brand Faculty, clean makeup brand Athr, and skincare brand Wildkat.
Here’s to fewer blemishes in 2024.
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