by While many in beauty had a great year with makeup finally joining skin care and fragrance for a post-pandemic sales recovery, there were also some pretty significant declines (Revlon’s bankruptcy, Amyris’ bankruptcy, Estée’s tanking stock price Lauder, and more).
The blemishes are outside the norm of beauty. Over the years, the category has gone from strength to strength, growing even during downtimes as consumers treat themselves to more affordable lipsticks, mascaras and face creams. In 2023, most beauty issues were caused by company-specific issues, due to the fallout from the COVID-19 pandemic or the economic slowdown in China.
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The negative trend was started by Revlon, which spent the first few months of the year mired in bankruptcy proceedings after filing for Chapter 11 in 2022 amid a large debt pile.
Revlon has been controlled by Ronald Perelman’s MacAndrews & Forbes since it took over through a hostile takeover in the ’80s. For years, he used the brand to promote himself in the world of society, fashion and Hollywood, but the problems increased in 2020 during the COVID-19 pandemic.
The business, the parent company of Revlon, Almay and Elizabeth Arden brands, emerged from Chapter 11 bankruptcy after just under a year in May, with a new owner, a new board and billions less in debt.
He also parted ways with the Perelmans: Ronald Perelman resigned as part of the bankruptcy negotiations, and his daughter Debra Perelman stepped down as CEO in August.
In her place, Avon veteran Elizabeth A. Smith was appointed interim CEO. She was introduced as executive chairman of Revlon’s board of directors in May and continued in that role as it emerged from Chapter 11 bankruptcy.
But while Revlon was emerging from Chapter 11 proceedings, another company was preparing to enter.
Amyris, a one-time biotech store that sought to transform the beauty industry with innovative and sustainable ingredients and later transitioned into a brand incubator, filed for Chapter 11 bankruptcy in Delaware Court in August.
As part of the events, he put some of his brands on sale. Recently, four of those were sold at auction: Skin care brand Biossance sold to online beauty retailer THG Beauty, formerly The Hut Group, for $20 million; Scent Theory Products paid $600,000 for 4U By Tia; Labs paid Dr. Reddy $3 million from Menolalabs; and HRB Brands paid $1.75 million for the clean baby care brand Pipette.
Then there was the Estée Lauder Cos., which slowed down after years of rapid growth. The owner of Clinique, Mac, Jo Malone and Tom Ford has seen its share price rise this year due to declines in its China retail and travel businesses, as well as increased competition.
In November, Lauder cut its full-year forecast several times as troubles continued in its China business, along with the potential risks of disruption to business in Israel and elsewhere. in the Middle East. Net sales for 2024 are now forecast to be between a 2 percent decrease and a 1 percent increase compared to the previous year, after previously forecasting a 5 percent to 7 percent increase. 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.
Share declines also fueled speculation about what would happen to the company, with some analysts calling for a management change and a move away from longtime CEO Fabrizio Freda, who joined in 2008 and oversaw a long period of growth. A transfer would require the approval of the Lauder family (they have a 35 percent stake in the company, including supervisory shares).
Another option, multiple sources said, is to add a key operating role to the C-suite and implement a more gradual succession plan.
Beyond management changes, the troubles have put Lauder’s future on the public markets in question, including delisting the company, although this appears unlikely. Other cases involve M&A, with L’Oréal and LVMH being thrown into the mix, although either could trigger antitrust concerns.
There is also the possibility that an active investor could be involved. In May, reports indicated that Nelson Peltz was considering Lauder as his next play.
Elsewhere on the public markets, several beauty businesses that have gone public have run into trouble in recent years.
Waldencast, which has only two brands on its roster – Milk Makeup and Obagi Skincare – indicated that it was at risk of delisting from the Nasdaq, after entering the summer of 2022 through a special purpose acquisition company (often referred to as a SPAC).
The company received a written notice from Nasdaq indicating that it was subject to delisting because it had not filed its annual report with the Securities and Exchange Commission.
According to a number of regulatory filings, the issue appears to stem from professional skin care company Obagi Skincare, which purchased Waldencast from Haitong Zhonghua International Financial Acquisition Fund in 2021.
The company was due to report fourth quarter earnings and an annual report on March 15, but on April 25, it said the filing was delayed 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 out of “concerns regarding the lapse of pending renewal of import licenses in Vietnam and related effects, which, among other things, prompts the need for more analysis.”
Olaplex – which only a few years ago was celebrated as a successful IPO – also struggled. 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 personal injuries to their hair and scalp, including hair loss and damaged hair. , something the company has denied.
But in October, Olaplex appointed CEO Amanda Baldwin (from Supergoop, where she was CEO and helped build the business into a sunscreen empire). JuE Wong, who started in the business in 2020, left.
Andrew Stanleick, the publicly listed owner of Hydrafacial, BeautyHealth, also departed as president at the same time the company disclosed lower-than-expected US revenue and $63.1 million in restructuring charges related to device upgrades First generation Syndeo Hydrafacial.
The indie beauty world has also been troubled, with several startups closing amid rising costs and increased competition, including men’s nail polish brand Faculty, clean makeup brand Athr, and skincare brand Wildkat.
Here’s to fewer faults in 2024.
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