A week after makeup brand Morphe announced on Twitter that it would be closing all U.S. stores, its parent company, Forma Brands, has filed for Chapter 11 bankruptcy.
Forma Brands is the incubator and holding company behind cosmetic labels such as Morphe, Jaclyn Cosmetics, Playa, Lipstick Queen and Ariana Grande‘s R.E.M. Beauty. In an official statement, Forma confirmed that its assets would be acquired by a group of lenders including Jefferies Finance LLC, Cerberus Capital Management LP and Intermediate Holdings LLC. Forma was given roughly $33 million dollars from creditors to support business operations through the sale process.
The bankruptcy news isn’t exactly unexpected: Forma is among the many brands facing significant challenges post-pandemic, and it’s seen a string of controversies with influencers, supply chain woes and the recent store closures.
Revenue began to fall short of ambitious targets in 2021, and around the same time, the brand became plagued with controversies surrounding collaborations with mega influencers like Jeffree Star and James Charles, who were the subjects of public scrutiny for multiple questionable statements and actions.
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At the same time came a string of business missteps. In 2020, Forma acquired Playa, a hair-care line, and Lipstick Queen, a lipstick brand, and introduced its own skin-care and supplement lines. All of these projects failed to meet projected sales, per reporting by Business of Fashion; in December of 2022, Playa’s founder sued Morphe and General Atlantic, Forma’s owner, for mishandling the brand after it was acquired.
By October of 2022, Business of Fashion confirmed that Forma was exploring emergency options amid financial insecurity. Reorg Research also estimated the company was roughly $600 to $700 million in debt.
Forma isn’t the only influencer-driven beauty company experiencing uncertainty at the moment; on Tuesday came news that influencer-led brands Selfless by Hyram (helmed by Hyram Yarbro) and Item Beauty (fronted by Addison Rae) would be exiting their Sephora retail partnerships. Together, these developments signal a shifting tide and a loosening grip in the hold influencer brands once had on the industry as consumers turn to the time-tested expertise of professional-backed brands.
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Angela Wei
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