While many in the beauty industry have had a banner year that saw makeup finally join skincare and fragrance in a post-pandemic sales recovery, there have also been some pretty significant setbacks (Revlon's bankruptcy, Amyris' bankruptcy, declining Estée Lauder stock price and more).
The imperfections are outside the standard of beauty. For years, the category has gone from strength to strength, growing even in times of stagnation, as consumers treat themselves to more affordable lipsticks, mascaras and face creams than are available in fashion. In 2023, most beauty concerns were caused by company-specific issues, exacerbated by the impact of the COVID-19 pandemic or the economic slowdown in China.
More from WWDKicking off the negative trend was Revlon, which spent the first few months of the year stuck in bankruptcy proceedings after filing for Chapter 11 in 2022 amid a hefty pile of debt.
Revlon has been controlled by Ronald Perelman's MacAndrews & Forbes since he took over in 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 escalated in 2020 during the COVID-19 pandemic.
The company, parent of the Revlon, Almay and Elizabeth Arden brands, emerged from Chapter 11 bankruptcy in May after just under a year, with new ownership, a new board and billions less debt.
It also parted ways with the Perelmans: Ronald Perelman stepped down as part of bankruptcy negotiations, while his daughter Debra Perelman left as CEO in August.
In her place, Avon veteran Elizabeth A. Smith was named interim CEO. She was appointed executive chairman of Revlon's board of directors in May and remained in that role after it emerged from Chapter 11 bankruptcy.
But as Revlon exited Chapter 11 proceedings, another company was preparing to enter.
The story continues
Amyris, once a biotech darling who set out to change the beauty industry with innovative and sustainable ingredients and later turned to brand incubation, filed for bankruptcy in August in a Delaware court.
As part of the procedure, it has offered a number of its brands for sale. Four were recently sold at auction: skincare brand Biossance was sold for $20 million to online beauty retailer THG Beauty, formerly known as The Hut Group; 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.
Then there was the Estée Lauder Cos., which suffered a slowdown after years of rapid growth. Clinique owners Mac, Jo Malone and Tom Ford have seen their share price plummet this year due to declines in Chinese and travel retail, as well as increasing competition.
In November, Lauder again cut its full-year forecast as problems in its Chinese operations continued, combined with the potential risks of further business disruptions in Israel and other parts of the Middle East. Net sales for 2024 are now forecast to be between a decline of 2 percent and an increase of 1 percent from the previous year, after previously anticipating an increase of between 5 and 7 percent. Adjusted diluted net earnings per common share are expected to decline between 33 and 25 percent.
The news caused the stock price to drop about 19 percent, closing at a six-year low of $104.51. Since the beginning of the year, the stock has fallen more than 50 percent.
The share price falls have also led to speculation about what could happen to the company. Some analysts called for a management change and a shift away from longtime CEO Fabrizio Freda, who took office in 2008 and oversaw a long period of growth. A shift would require the approval of the Lauder family (they have a 35 percent stake in the company, including supervoting shares).
An alternative option, multiple sources said, would be to add an executive operational role to the C-suite and implement a more gradual succession plan.
In addition to management changes, the problems have put Lauder's future in the public markets in doubt, including the company's delisting, although this is seen as unlikely. Other scenarios include mergers and acquisitions, putting L'Oréal and LVMH into the mix, although both could raise antitrust concerns.
There is also the possibility that an activist investor could get involved. Rumors swirled in May that Nelson Peltz was considering making Lauder his next play.
Elsewhere in the public markets, problems emerged at several beauty companies that had gone public in recent years.
Waldencast, which has just two brands on its list - Milk Makeup and Obagi Skincare - revealed it was in danger of being delisted from the Nasdaq after joining via a special purpose acquisition company (often called a SPAC) in the summer of 2022.
The company received a written notice from Nasdaq indicating it was being delisted for failing to file its annual report with the Securities and Exchange Commission.
According to a slew of regulatory filings, the issue appears to stem from professional skincare company Obagi Skincare, which Waldencast bought from the Haitong International Zhonghua Finance Acquisition Fund in 2021.
The company was set to release fourth-quarter earnings and an 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. It further explained that the review stemmed from "concerns over the expiration of Vietnam's import permit renewals, which are still pending, and related impacts, which, among other things, triggered the need for further analysis."
Olaplex - which was celebrated as a successful IPO just a few years ago - has 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 alleged 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 company into a sunscreen empire). JuE Wong, who joined the company in 2020, left.
Andrew Stanleick also left publicly traded Hydrafacial owner BeautyHealth as president at the same time the company revealed lower-than-expected U.S. revenues and $63.1 million in restructuring costs related to device upgrades to the first generation of Syndeo Hydrafacial devices.
The indie beauty world also faced challenges, with several startups closing due to rising costs and increasing competition, including men's nail polish brand Faculty, clean makeup brand Athr and skincare brand Wildkat.
Less bumps in 2024.
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