The $570 billion beauty industry has always been fertile ground for disruption. Just like fast fashion, trends move fast and the power of social media increases your popularity.
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Beauty trends change fast, at a cost
The cosmetics industry is unique in that the small start-up experience catches on much faster than in other sectors. Sure, there are still major players that have been around for years, think Estee Lauder. (THE) – Get a free reportowned by LVMH (LVMHF) Sephora, Coty (COTY) – Get a free reportUlta Beauty (LAST) – Get a free reportand L’Oréal (LRLCF) . But the new emerging brands conquer the market. And when they do, they are quickly acquired, becoming giants in their own right, or squashing themselves like tiny contoured roaches.
Unfortunately, the case of the cockroach is more appropriate when it comes to the story of Morphe Cosmetics, owned by parent company Forma Brands.
Making a name for himself through associations with celebrities and big-name influencers like Jaclyn Hill, Jeffree Star, Charlie D’Amelio, and Emma Chamberlain, Morphe seemed to have it all figured out. The more popular her partners became, the more popular she became. And since most cosmetics are relatively cheap to produce (and even cheaper to promote), the business model seemed airtight.
That is, of course, until the trends changed again. Morphe, once a model for cutting edge and creativity, now owes $868 million in debt and interest obligations. Therefore, he is reportedly in talks to sell himself to lenders, including Jefferies Finance. (jeff) – Get a free report.
Morphe will be dedicated to lenders and shutter shops
According to court documents, Forma is struggling with “liquidity and operational problems as a result of the COVID-19 pandemic, widespread changes in consumer beauty habits, and their need to end associations with certain influencers.”
Morphe will turn over all of its operations, websites and wholesalers to lenders in exchange for $33 million in debtor-in-possession financing. You plan to continue paying employees and meeting benefits.
“We are excited to reinforce our focus on the opportunities we see ahead for our brands and continue to bring our carefully curated beauty products to consumers through our individual brand platforms online, retail partners and Morphe stores outside of the US.” USA,” CEO Simon Cowell said in a press release.
Source: news.google.com