Morphe Parent files for bankruptcy, parts ways with Ariana Grande’s REM Beauty

Forma Brands, the beauty incubator behind Morphe, Jaclyn Cosmetics and Ariana Grande’s REM Beauty, has filed for Chapter 11 bankruptcy protection in Delaware, a week after Morphe announced it was closing its US stores.

In a court filing, the company said its assets will be taken over by a group of lenders: Jefferies Finance LLC, Cerberus Capital Management LP and FB Intermediate Holdings LLC. Forma also secured about $33 million from creditors to continue operations.

An October report by Reorg Research, later confirmed by BoF, said Forma was exploring emergency financing options, including a potential Chapter 11 filing. At the time, Reorg Research estimated the company had $600 million to $700 million in debt.

Forma Brands will also lose one of its most famous cosmetic lines, REM Beauty.

Simon Cowell, chairman of Forma Brands, informed employees on Thursday that Forma and REM Beauty would also part ways, according to an internal email obtained by BoF.

“We have been in discussions with the REM Beauty team for some time about our future business relationship and the next chapter for the brand. We have come to a mutual decision that the brand will be best served under the ownership and operational management of the REM Beauty team,” Cowell’s email read.

Cowell said Forma intends to complete the transition within 45 days. During that time, the company will continue to sell REM’s remaining inventory online and ship to retail partners, including Ulta Beauty.

In early 2021, the company negotiated a license to launch makeup and skin care products for Grande, fast-tracking a space-themed makeup collection into production. In November 2021, REM Beauty launched “Chapter 1: Ultraviolet” and has since introduced three more chapters.

The Grande front-end line was considered a top priority within the company, and resources were diverted from other brands to support REM’s marketing and distribution efforts, according to several former Forma executives who spoke to BoF. However, sales of the line did not meet expectations.

Cowell’s email said Forma will “prioritize our brands and channels that are most meaningful to consumers, including Morphe and Morphe 2.”

Experts say the bankruptcy filing could be a “straw of salvation” for the struggling cosmetics company that was once valued at more than $2 billion. Following a majority investment by private equity firm General Atlantic in 2019, Morphe was relaunched as a Forma Brands incubator a year later.

According to internal documents reviewed by BoF, Forma Brands had projected more than $420 million in revenue in 2021, but was on track to do about $80 million less than that figure. Morphe posted sales of just $295 million in 2021, down from about $500 million in 2019, according to media reports.

The newly founded Forma Brands soon faced a series of setbacks, including the decline of beauty products; a pandemic that has de-prioritized makeup and Gen Z consumers with different taste and beauty habits than Morphe’s millennial customers. Around the same time, Morphe distanced itself from longtime influencer collaborators Jeffree Starr and James Charles, both embroiled in public feuds and controversies.

Plans to build other brands to go along with Morphe fell through. In 2020, Forma acquired Playa, a hair care line, and Lipstick Queen, a lipstick line, and introduced its own skin care and nutritional supplement lines. All met with lukewarm reception and disappointing sales.

In August 2020, the company launched a secondary Morphe line, Morphe 2, fronted by Charli and Dixie D’Amelio and aimed at Generation Z. A skincare line with Charli D’Amelio and a cosmetics brand with Demi Lovato were in development but never materialized . General Atlantic declined to comment.

In December 2022, BoF reported that Playa founder Shelby Wild sued Morphe and General Atlantic in New York state court, alleging the companies failed to adequately support her line after the acquisition in 2020. In court documents, Wild said General Atlantic discussed plans to turn the small but fast-growing Playa into a $50 million company within five years. According to internal documents reviewed by BoF, Forma forecast $2 million in sales for Playa in 2022, barely up from the year before, and said it would “retain new product development at Playa.” Sephora has confirmed that it is launching Playa in 2022.

“Over the past year, Forma Brands has implemented initiatives to stabilize our business and reposition our organization for long-term growth,” Simon Cowell, president of Forma Brands, said in a statement Thursday.

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