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Beauty Bankruptcies Surged in 2023

Published January 11, 2024
Published January 11, 2024
Planet Volumes via Unsplash

In 2022, the BeautyMatter Deal Index tracked eight brands that announced they were shutting down or filing for bankruptcy. That increased to a record-shattering 28 bankruptcies and shutdowns during the year, more than those tracked in 2020, 2021, and 2022 combined, with 18 tracked in the back half of 2023. There were far more brands that quietly shut down and were not tracked. This trend is expected to continue into 2024.In 2023, most of the issues in beauty were driven by company-specific problems compounded by macroeconomic issues. The rise of brand failures and the opportunity they present for a particular class of investors remains a constant topic of conversation.Companies across sectors in the US collapsed at record rates in 2023. Rising borrowing costs and interest rates at a 22-year high combined with the tailing off of pandemic stimulus pushed more debt-strapped companies and households to file for protection, according to data compiled by Epiq AACER, a New York–based bankruptcy data provider.Commercial Chapter 11 filings increased 72 percent to 6,569 from the previous year’s total of 3,819. Overall commercial filings increased 19% to 25,627 from the 21,479 registered the previous year, and experts predict more distress looms. Total bankruptcy filings in 2023 were 445,186, an 18% increase from the 378,390 registered during 2022. While the year-over-year increase is substantial, total bankruptcy filings remain lower than the pre-pandemic total of 757,816 recorded in 2019.While the beauty sector narrative was one of resiliency and growth, it was not immune to this larger economic trend.

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