Morphe parent company Forma Brands has filed for bankruptcy.
On Thursday, Forma Brands filed for voluntary Chapter 11 in the U.S. Bankruptcy Court for the District of Delaware. Its portfolio of brands includes Morphe, Morphe 2, Jaclyn Cosmetics, Bad Habit, Lipstick Queen and Playa Beauty. Forma reached a deal with lenders, including Jefferies and Cerberus Capital Management. Secured creditors will take over Forma’s wholesale operations, online platforms and international Morphe retail stores, while providing $33 million of new money, subject to court approval, according to a company statement. According to court documents, Forma has between $500 million and $1 billion in liabilities.
“We will have additional financial resources available to invest in our multi-category portfolio, product launches, and innovative brand and marketing strategy as we advance our vision to inspire creativity, promote inclusivity and connect with consumers around the world through beauty,” said Simon Cowell, president of Forma Brands, in a statement. “We appreciate the continued support of our financial partners and believe this is the best path forward for Forma Brands as we position the business for the long term.”
The latest news is both an expected outcome and the coup de grâce on a two-year saga that began in 2020. In Aug. 2019, private equity firm General Atlantic made a reported 60% acquisition of Morphe, valuing the business at $2.2 billion. In August 2020, Morphe announced it would be bundled under the portfolio company Forma Brands, a new incubator, accelerator and “curator of next-generation beauty brands” owned by Forma and its parent company General Atlantic, according to a press release. Business of Fashion reported that Forma Brands had budgeted for over $420 million in revenues in 2021 but was on track to come in about $80 million short of that figure. Morphe’s revenue for 2021 was $295 million, down from about $500 million cited in media reports in 2019. Jaclyn Cosmetics was the only Forma brand that came close to hitting revenue projections, with $18.2 million in sales. Forma announced the closure of all its U.S. Morphe stores on January 6. General Atlantic declined to comment.
The Company has appointed Stephen Marotta as chief restructuring officer. Marotta is a senior managing director at Ankura Consulting Group, LLC, and previously served as chief restructuring officer at Brooks Brothers and Payless ShoeSource, among others.
“Over the last year, Forma Brands has implemented initiatives to stabilize our business and reposition our organization for long-term growth. This agreement is a testament to the strength of our brands most meaningful to our consumers, including Morphe and Morphe 2,” Cowell said in the statement. “We are excited to reinforce our focus on the opportunities we see ahead for our brands and continue bringing our thoughtfully selected beauty products to consumers through our individual online brand platforms, retail partners and Morphe stores outside the U.S.”