One week after makeup mark Morph 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 brands such as Morphe, Jaclyn Cosmetics, Playa, Lipstick Queen and Ariana Grande‘s REM beauty. In a civil servant announcement, 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 received about $33 million 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 in the wake of the pandemic, and has seen a number of controversies with influencers, supply chain issues and recent store closures.
Revenue began to fall short of ambitious targets in 2021, and around the same time the brand was plagued by controversies surrounding collaborations with mega-influencers such as Jeffrey Starr and James Charleswho was subject to public scrutiny for several questionable statements and actions.
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At the same time came a string of business failures. In 2020, Forma acquired Playaa hair care line and Lipstick Queen, a lipstick brand, and introduced its own skin care and supplement lines. All these projects did not meet the expected sales, as reported by Business of fashion; in December 2022, Playas founder defendant Morphe and General AtlanticFormas owner, for mishandling the brand after it was acquired.
In October 2022, Business of fashion confirmed that Forma was exploring emergency situations amid economic uncertainty. Reorg Research also estimated that the company had about $600 to $700 million in debt.
Forma isn’t the only influencer-driven beauty company experiencing uncertainty at the moment; on Tuesday, news broke that influencer-led brands Selfless by Hyram (helmed by Hyram Yarbro) and Item Beauty (fronted by Addison Rae) would exit their Sephora retail partnerships. Together, these developments signal a changing tide and a loosening of the hold influencer brands once had on the industry as consumers turn to proven expertise from professionally supported brands.