As coronavirus continues to surge, filing for bankruptcy has become a necessary step that companies from Neiman Marcus to JCPenney to Muji have leaned on. And it is expected to become a more popular move for retailers and brands as the year trudges on with economic uncertainty.
But, there is life after death, even if it means companies are a shell of their former selves. AS Beauty is in the throes of resuscitating once buzzy brands Julep and Laura Gellar after its previous owner Glansaol filed for chapter 11 bankruptcy at the end of 2018.
Warburg Pincus-backed Glansaol attempted to sell these brands, as well as Clark’s Botanicals, for $16.2 million, after acquiring them in 2016 for more than $120 million. Glansaol had grand plans to integrate and scale these “complementary brands” when it first came to market; it fell short after just two years in. Clarks Botanicals, for its part, was bought back by its founder Francesco Clark last spring when AS Beauty purchased Laura Geller and Julep.
“We could be on the phone for the next three hours, and I could tell you everything that I think they did wrong, but I think the overarching crux of it was a story of big jockey, small horse. It was trying to be run like a $400 million company when it wasn’t,” said Joey Shamah, AS Beauty CEO. “Everything from how big the team was to how much inventory they were buying to working in silos and not collaboratively, [Glansaol] wasn’t run with the entrepreneurial spirit of managing a profitable business.”
Previously, Joey Shamah, his father Alan Shamah and Scott-Vincent Borba founded E.l.f. Cosmetics. Joey Shamah started AS Beauty with the Azrak family, who had a foothold in the licensed sleepwear market.
Though Covid-19 was obviously not accounted for when AS Beauty bought Laura Geller and Julep, Joey Shamah spent much of 2019 cost cutting and rightsizing the businesses. The AS Beauty team went from 180 people to about 35 now, and is no longer “chasing customers to have a presence in stores.” For example, AS Beauty pulled Julep out of Ulta last year, because it was “extremely unprofitable,” he said. For 2020, it’s focused on Target, which has not seen the coronavirus-induced store shutdowns that beauty-centric retailers have faced. Meanwhile, Laura Gellar, which serves an older beauty customer that is above 40 years old, has strengthened its relationship with QVC.
“Laura resonates extremely well on TV, and I think she is in a unique spot. With millennial brands, you have the Kardashians, who are targeting 18 to 35 year olds, and then Urban Decay, but there isn’t much competition with that older, makeup-minded customer that wants newness,” said Joey Shamah. He called out the brand’s new Spackle primers that launched this year as a “climate-appropriate product launch.” This fall, that will extend to Julep when it launches its “protection collection,” a series of hand sanitizers, sanitizing wipes, and other products at essential retailers.
While Joey Shamah would not share 2019 retail sales, he said that being exposed to non-traditional retail outlets has been helpful for 2020 forecasts. He said about 75-80% of all business is now done in non-brick-and-mortar outlets, and AS Beauty expects sales to be up 20% for the year.
To that end, digital will continue to be the priority. As it was key for nearly all beauty brands willing to take the plunge amid Covid-19, Amazon is very much aligned with selling Laura Gellar on QVC and being where that older customer is now. Joey Shamah said he has no plans to put Laura Gellar in Amazon competitor Target. As for Julep, Amazon video and how-to content has been used with the intention to draw in new customers and reignite loyalists.
“We really have been able to have a mini site on Amazon, which gives the customer the ability to interact and learn about new products and videos,” he said. “It’s a good sales channel. Amazon breaks the barrier between prestige and mass, and is changing the matrix of where customers are buying.”
But just because video is working, Joey Shamah is not venturing into platforms like TikTok just yet or trying to do too many things at once.
“We’re only going to be where we can acquire customers profitably right now; we don’t play much on TikTok, but we do play on Facebook and Instagram, which we are looking to ramp up over the next few quarters,” he said. “Looking at retention rates and how quickly customers are coming back is what we are focused on, because that’s going to enable us to spend a little bit more freely. We’re not here to sell top-line revenue; we’re here to make sure that the company doesn’t go back to the dead spot it was in two years ago. It’s all about doubling down on what’s working and not chasing areas of question that we can’t own.”