Top 10 Stories of 2023: Beauty Develops Blemishes in 2023

While many in beauty have had a stellar year with makeup finally joining skin care and fragrance for a post-pandemic sales recovery, there have also been some pretty significant downs (Revlon’s bankruptcy, Amyris’ bankruptcy, Estée Lauder’s tanking stock price, and more).

The blemishes are outside of beauty’s norm. For years, the category has gone from strength to strength, growing even in the downtimes as consumers treat themselves to more-affordable-than-fashion lipsticks, mascaras and face creams. In 2023, most of beauty’s issues were driven by company-specific problems compounded by fallout from the COVID-19 pandemic or the economic slowdown in China.

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Beginning 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 had been controlled by Ronald Perelman’s MacAndrews & Forbes since he took it over via hostile takeover in the ’80s. 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 business, the parent company of the Revlon brand, Almay and Elizabeth Arden, emerged from Chapter 11 bankruptcy after just under a year in May, with a new owner, new board and billions less in debt.

It also parted ways with the Perelmans: Ronald Perelman stepped away as part of bankruptcy negotiations, while his daughter Debra Perelman exited as CEO in August.

In her place, Avon veteran Elizabeth A. Smith was appointed interim CEO. She was brought in as executive chair of the Revlon board of directors in May and continued in that role as it emerged from Chapter 11 bankruptcy.

But while Revlon was exiting Chapter 11 proceedings, another company was preparing to enter.

Amyris, a onetime biotech darling that sought to change the beauty industry with innovative and sustainable ingredients and later moved into brand incubation, filed for Chapter 11 bankruptcy in a Delaware Court in August.

As part of the proceedings, it put several of its brands up for sale. Recently, four of those were sold at auction: Skin care 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 baby care brand Pipette.

Then, there was the Estée Lauder Cos., which after years of rapid growth underwent a slowdown. The owner of Clinique, Mac, Jo Malone and Tom Ford saw its share price nosedive this year due to declines in its China and travel retail businesses, as well as increasing competition.

In November, Lauder lowered its full-year forecast once again as troubles in its China business continue, combined with the potential risks of further business disruptions in Israel and other parts of the Middle East. Net sales for 2024 are now forecasted to range between a decrease of 2 percent and an increase of 1 percent versus the prior year, after previously anticipating a rise of between 5 percent and 7 percent. Adjusted diluted net earnings per common share are expected to decrease between 33 percent and 25 percent.

The news sent its share price down by around 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 have also sparked speculation about what could happen to the company, with some analysts calling for a management change and a shift away from longtime CEO Fabrizio Freda, who joined in 2008 and oversaw a long period of growth. A shift would require the Lauder family’s approval (they have a 35 percent stake in the company, including supervoting shares).

An alternative option, said multiple sources, would be to add a chief operating role to the C-suite and put a more gradual succession plan in place.

Beyond management changes, the troubles have brought into question Lauder’s future on the public markets, including delisting the company, although this is seen as unlikely. Other scenarios involve M&A, with L’Oréal and LVMH being put in the mix, although either could spark antitrust concerns.

There’s also the possibility that an activist investor could get involved. In May, reports swirled that Nelson Peltz was considering making Lauder his next play.

Elsewhere on the public markets, trouble brewed at multiple beauty businesses which had gone public in the past few years.

Waldencast, which has just two brands on its roster — Milk Makeup and Obagi Skincare — revealed that it was in danger of being delisted from the Nasdaq, after joining in summer 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 due to it not having filed its annual report with the Securities and Exchange Commission.

According to a slew 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 report fourth-quarter earnings and an annual report on March 15, but on April 25, it said it was delaying filing because of an ongoing review of its year-end 2022 financial statements and related issues, namely with Obagi. It further explained that the review arose from “concerns regarding the lapse in renewing the importation licenses in Vietnam, which are still pending, and related effects, triggering, among other things, the need for further analysis.”

Olaplex — which just a few years ago was celebrated as a successful IPO — 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 claimed they had sustained personal injuries to their hair and scalp, including hair loss and damaged hair, something the company has vehemently denied.

But in October, Olaplex appointed Amanda Baldwin CEO (from Supergoop, where she was CEO and helped build the business into a sunscreen empire). JuE Wong, who joined the business in 2020, departed.

Andrew Stanleick also departed publicly listed Hydrafacial owner BeautyHealth as president at the same time that the company revealed lower-than-expected U.S. revenue and $63.1 million in restructuring charges related to device upgrades of early generation Syndeo Hydrafacial devices.

The indie beauty world faced troubles too, with several start-ups closing down amid rising costs and increase competition, including men’s nail polish brand Faculty, clean makeup brand Athr, and skin care brand Wildkat.

Here’s to fewer blemishes in 2024.

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