by While many in the beauty sector have had a stellar year that saw makeup finally join skincare and fragrance for a post-pandemic sales rebound, there have also been some pretty significant drops (Revlon’s bankruptcy , the bankruptcy of Amyris, the collapse of the share price of Estée Lauder and more). .
Imperfections are outside the beauty norm. For years, the category has gone from strength to strength, growing even in downtime, when consumers treat themselves to more affordable lipsticks, mascaras and face creams than fashion. In 2023, the majority of beauty issues were due to company-specific issues exacerbated by the fallout from the COVID-19 pandemic or the economic slowdown in China.
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Starting the negative trend was Revlon, which spent the first few months of the year trapped in bankruptcy proceedings after filing for Chapter 11 in 2022 amid a considerable amount of debt.
Revlon had been controlled by Ronald Perelman’s MacAndrews & Forbes since Perelman took control through a hostile takeover in the 1980s. For years he used the brand to catapult himself into the worlds of society, fashion and Hollywood, but problems intensified. in 2020 during the COVID-19 pandemic.
The company, the parent company of the Revlon, Almay and Elizabeth Arden brand, emerged from Chapter 11 bankruptcy after just under a year in May, with a new owner, a new board of directors and billions less in debt.
He also parted ways with the Perelmans: Ronald Perelman stepped down as part of bankruptcy negotiations, while his daughter Debra Perelman stepped down as CEO in August.
In her place, Avon veteran Elizabeth A. Smith was named interim CEO. She was named CEO of Revlon’s board of directors in May and continued in that role when it emerged from Chapter 11 bankruptcy.
But while Revlon was emerging from Chapter 11, another company was preparing to enter.
Amyris, a one-time biotech darling that sought to disrupt the beauty industry with innovative, sustainable ingredients and then moved into brand incubation, filed for Chapter 11 bankruptcy in a Delaware court in August.
As part of the process, it put several of its brands up for sale. Recently, four of them were sold at auction: skincare brand Biossance was sold to online beauty retailer THG Beauty, formerly known as 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 child care brand Pipette.
Then there was Estée Lauder Cos., which after years of rapid growth suffered a slowdown. The owner of Clinique, Mac, Jo Malone and Tom Ford saw its share price fall this year due to declines in its China and travel retail businesses, as well as growing competition.
In November, Lauder again lowered its full-year forecast as problems continue in its business in China, combined with potential risks of further business disruptions in Israel and other parts of the Middle East. Net sales for 2024 are now forecast to range between a 2 percent decline and a 1 percent increase from a year ago, after previously anticipating an increase of between 5 percent and 7 percent. Adjusted diluted net earnings per common share are expected to decline between 33 percent and 25 percent.
The news sent its share price down about 19 percent to close at a six-year low of $104.51. Since the beginning of the year, the stock has fallen more than 50 percent.
The stock declines have also sparked speculation about what could happen to the company, with some analysts calling for a change in management and a move away from longtime CEO Fabrizio Freda, who joined in 2008 and oversaw a long period of growth. A change would require approval from the Lauder family (they have a 35 percent stake in the company, including super-voting shares).
An alternative option, multiple sources said, would be to add an operational chief role to senior management and put in place a more gradual succession plan.
Beyond the management changes, the problems have put Lauder’s future in the public markets in doubt, including the company’s delisting, although this is considered unlikely. Other scenarios involve mergers and acquisitions, with L’Oréal and LVMH among them, although any of them could raise antitrust concerns.
There is also the possibility of an activist investor participating. In May, reports circulated that Nelson Peltz was considering making Lauder his next play.
Elsewhere in the public markets, problems arose at multiple beauty companies that had gone public in recent years.
Waldencast, which has just two brands on its roster, Milk Makeup and Obagi Skincare, revealed it was in danger of being delisted from the Nasdaq, after joining in summer 2022 via a special purpose acquisition company ( often referred to as a SPAC).
The company received written notice from Nasdaq indicating that it was subject to delisting due to its failure to file its annual report with the Securities and Exchange Commission.
According to a series of regulatory filings, the issue appears to stem from professional skin care company Obagi Skincare, which Waldencast purchased from Haitong International Zhonghua Finance Acquisition Fund in 2021.
The company was due to file its fourth-quarter earnings and annual report on March 15, but on April 25 it said it was delaying the filing due to an ongoing review of its year-end 2022 financial statements and related issues, namely with Obagi. He further explained that the review arose from “concerns about the lapse in the renewal of import licenses in Vietnam, which are still pending, and the related effects, which generated, among other things, the need for a more in-depth analysis.”
Olaplex, which just a few years ago was celebrated as a successful initial public offering, has also had problems. After building a cult following for its bond-building products, the company hit a rough patch amid increased competition and a since-dismissed lawsuit in which several plaintiffs claimed they suffered personal injuries to their hair and scalp. , including hair loss and damaged hair. something the company has vehemently denied.
But in October, Olaplex named Amanda Baldwin CEO (of Supergoop, where she was CEO and helped build the business into a sunscreen empire). JuE Wong, who joined the company in 2020, has left.
Andrew Stanleick also left Hydrafacial’s publicly traded owner, BeautyHealth, as president, just as the company revealed lower-than-expected U.S. revenue and $63.1 million in restructuring charges related to the upgrades. of first generation Syndeo Hydrafacial devices.
The independent beauty world also faced trouble, with several startups closing amid rising costs and increased competition, including men’s nail polish brand Faculty, clean makeup brand Athr and skin care brand Wildkat skin.
For having fewer imperfections in 2024.
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