Hello!
How is everyone feeling this week? I’m already getting a lot of out-of-office emails, so I know we are fully in those sleepy days of December. I’m going to get right to it today, since so many of us are strapped for time and counting down to the holidays.
A few housekeeping notes: The Business of Fashion will be closed Dec. 25 thru Jan. 1, so you won’t be getting Full Coverage the next two weeks (of course, if something big happens you’ll be hearing from us). Instead, look out for our daily best-of series, which chronicles the highs and lows of the year.
Today, you’ll be reading about:
- A meditation on creator-first brands, with a deep dive on Tina Craig’s U Beauty.
- An update on the state of Anastasia Beverly Hills.
- My take on chief executive Sue Nabi’s potential departure from Coty.
Can Tina Craig Become the Next Creator-Turned-Founder Breakout?
When I talk to founders who have recently sold their businesses, one of the many tips they give me for launching a brand today is to start with a famous face.
And no, we’re not talking about celebrities; we’re talking about influencers or creators.
Given the high cost of marketing and intense competition in beauty right now, it’s no surprise that some of the most talked-about brands have people like Mona Kattan (Kayali), Chriselle Lim (Phlur), Patrick Starrr (One/Size), Mario Dedivanovic (Makeup by Mario) and the illustrious Bobbi Brown (Jones Road) leading them. Influencers are who customers are paying attention to!
With the exception of Brown, many of these founders were met with scepticism when starting their brands. What did a fashion influencer know about beauty? Can a vlogger really go beyond YouTube when so many have failed? Tina Craig, a fashion influencer known as Bag Snob, was in the same boat upon launching her line U Beauty in 2019. But Craig did have a foothold in beauty as one of luxury’s biggest customers — vouching for and touring with brands like La Prairie.
“I’m the most reluctant skincare founder. The world doesn’t need another skincare brand. It just needs one product that works,” she told me recently.
For U Beauty, it’s actually two products: Its bestseller dubbed The Duo is made up of the Resurfacing Compound and the Super Hydrator and retails for $396 (individually they are $228 and $168, respectively). Beauty insiders have talked to me a lot about the Super Hydrator, a rich fluid moisturiser that doesn’t feel heavy, and its corresponding body cream called the Super Body Hydrator.
Given its high, high price point, U Beauty has focused largely on its direct channels and partnerships with department stores, Bluemercury, Cos Bar and Violet Grey. (The brand is small and stable, on track to hit $35 million in revenue next year.) It hadn’t made the choice between Ulta Beauty and Sephora, until now… later this month, the brand is launching at Sephora.com and into 46 select Sephora stores in March. While Sephora remains the place to launch, its luxury play is still developing largely because there are questions about whether the wealthiest beauty shoppers will brave the retailer’s sometimes chaotic, birthday party-ridden stores.
U Beauty will be one of the most expensive skincare brands in Sephora, joining Dior Beauty, Augustinus Bader and a smattering of products from Lancôme and Clarins at the top. It’s a gamble for the line, but one worth taking.
“With a luxury brand, you really have to hold the brand really, really tightly,” said Katie Borghese, U Beauty co-founder and chief marketing officer. “You can’t just be everywhere at all times; [if you do] it’s at risk of losing brand equity.”
But what even is luxury beauty today when both price and product efficacy are under scrutiny?
It’s a question I’ve been asking myself for a long time. Fashion has its host of heavy hitters: Hermès, Chanel, Dior, Prada and younger names like Jacquemus, but beauty’s “luxury” names are far more disparate. Yes, Chanel and Dior have probably the most representative beauty products (and best beauty businesses), but some of L’Oréal’s host of licensed names (such as Valentino) leave something to be desired. Names like La Prairie remain top of mind, but have struggled in this beauty slowdown.
But U Beauty has another string to its luxury proposition. Earlier this year, it partnered with “White Lotus” star Michelle Monaghan as an ambassador as a clear signal of who U Beauty is for.
“I hope I can talk about aging in a positive way, in a positive light. I hope I can exemplify that for my daughter, who is 17,” Monaghan told me, looking picture-perfect on Zoom. The star expects the two will be able to share products while shopping at Sephora together.
Selecting a face over the age of 40 and best known for starring in a luxury-coded show underscores U Beauty’s aspirations to reach wealthy women — you know, the ones who can actually afford its products. But perhaps the brand’s founders knew that in order to convey real luxury, Craig couldn’t be the only one on its billboards anymore.
What’s the Future Of Anastasia Beverly Hills?
Late on Wednesday I heard from Anastasia Beverly Hills about the rumours that it was restructuring its crippling debt. Bloomberg reported on Monday that TPG exited most of its $600 million stake in the brand at a loss, reducing its minority position from 38 percent to 6 percent.
A spokesperson said via email, “ABH is pleased to have reached an agreement with its lenders and TPG that positions ABH to capitalize on its growth strategy, and Anastasia looks forward to continuing to work with ABH’s stakeholders to execute on that strategy.”
Put more simply, with new debt terms and likely new (unnamed) investors who took on TPG’s stake, the company has a lifeline.
Some Context: When it made its investment, TPG had the right to redeem its equity for cash after six years if ABH hadn’t sold or gone public. The problem is, a sale or IPO was elusive because of the state of the brand’s finances. In October 2024, Standard & Poor lowered its assessment of the firm to CCC-, reflecting its high risk and likelihood that it would default or would be unable to restructure its debt. (Daniela Morosini had a great story on this.) Then in August, the brand missed a loan payment that constituted a default, according to two different ratings firms.
The Backstory: ABH was probably the apex of the aughts beauty movement — it received a $3 billion dollar valuation(!!!), thanks to TPG, and was compared in many circles to Charlotte Tilbury, which later went on to sell to Puig. Other brands of the era like Pat McGrath Labs, Huda Beauty and Morphe raised capital at valuations of around a billion.
None of these companies lived up to expectations. Pat McGrath Labs has struggled with lack of clear direction and is worth a fraction of what it once was; and while Morphe is making inroads at Ulta Beauty and its assortment looks good (thanks to buyer &vest which refocused its attention on fewer, better products and operational knowledge), it’s not top of mind like it was in its heyday.
We can’t blame all of these downfalls on the end of high-glam makeup like some people do. We can blame them on lack of leadership, both in house and at their respective PE firms.
So What Happens at ABH now? The brand has room to breathe. No matter how much its founder, Anastasia Soare, has stretched beyond the brand’s core proposition of eyebrows, with recent launches like a light, easy-to-apply foundation and a “clean-girl” blush, the brand needed money to create innovation and to have inventory. (Mounting debt is also what crushed Revlon.)
Without the stress of zero cash and looming payments, now it’s time for the brand to get back to business: beauty. Let’s see if Anastasia Beverly Hills can make the comeback customers want and deserve.
Is Sue Nabi Really Out?
What Happened: On Friday, The Financial Times reported that Coty chief executive Sue Nabi and the company’s chairman, Peter Harf were out. Apparently, its controlling shareholder JAB Holdings is planning a mega-leadership overhaul.
Reading Between The Lines: Honestly, this makes sense. I’ve been hearing from people inside Coty and beauty know-it-alls that Nabi was planning on leaving the company for months.
Now might be the time.
In October, Coty confirmed it was reviewing its mass colour cosmetics business, including once-beloved Covergirl, as well as its operations in Brazil, to make itself a fragrance company. (Yup, Coty and everyone else.) Later that month, Kering dropped the bombshell that it was selling its entire beauty portfolio to competitor L’Oréal (including the Gucci licence, which Coty held).
My Take: Without a mass portfolio and a critical part of its fragrance portfolio, what kind of beauty company could Coty possibly be? One whose strengths lie in Burberry, Adidas, Lancaster and Sally Hansen? I don’t even know what some of its brands stand for (Miss Sporty), and I work in beauty.
I’m not saying Coty doesn’t have potential — Burberry and Hugo Boss have performed, but the strength of its larger portfolio isn’t obvious. What’s more, the company’s ambitions to be a luxury conglomerate, even listing on the French stock exchange, have pretty much stalled as soon as they were announced in 2023. And don’t forget Nabi hasn’t been completely locked in on product and sometimes focused on fringe. Remember that #undefinebeauty campaign meant to redefine the meaning of beauty in the dictionary? That’s still going on…
The one thing that is giving me pause is that Nabi’s contract was renewed in 2023 to 2030. Six more years is a long time, but I’m sure she wants to get full credit for her comp.
Merry Christmas, happy holidays and happy New Year to all of you! See you in 2026.
Priya
