The $570 billion beauty industry has always been fertile ground for disruption. Much like fast fashion, trends move quickly and the power of social media makes them even more popular.
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Beauty trends change quickly and at a cost
The cosmetics industry is unique in that small start-up brand experience gains popularity much faster than other sectors. please think (EL) – Get Free Reportowned by LVMH (LVMHF) Sephora, Coty (Coty) – Get Free ReportUlta Beauty (Ultra) – Get Free Reportand L’Oreal (LRLCF) But new pop-up brands are taking the market by storm. And when they do, they’re quickly acquired, or become gigantic in their own right, or are squashed like little cockroaches with contours.
Unfortunately, when it comes to the story of Morphe Cosmetics, which is owned by parent company Forma Brands, the cockroach case is the best fit.
Morphe, who made his name through partnerships with celebrities and influencers like Jaclyn Hill, Jeffrey Starr, Charlie D’Amelio and Emma Chamberlain, seemed to know it all. became more popular. And since most cosmetics are relatively cheap to manufacture (and even cheaper to market), the business model seemed closed.
That is, of course, until trends change again. Morph, once a beacon of cutting-edge trendiness and creativity, now owes $868 million in debt and interest. As such, he is reportedly in talks to pitch to lenders, including Jefferies Finance. (Jeff) – Get Free Report.
Morphe sets itself up as a lender and shutter store
According to court documents, Forma has faced “liquidity and operational issues as a result of the COVID-19 pandemic, widespread changes in consumer beauty habits, and the need to end partnerships with certain influencers.” suffering.
Morphe will turn over all businesses, websites and wholesalers to lenders in exchange for $33 million in debtor financing. We will continue to pay our employees and expand their benefits package.
CEO Simon Cowell said, “We will continue to focus on the opportunities our brands see ahead and continue to consume select beauty products through our individual online brand platforms, retail partners and Morph stores outside the United States. We are happy to offer it to people.” Press release.
