Morphe makeup, which reached a social media-fueled $2 billion valuation, said it plans to close all its U.S. stores.
On Thursday, the company listed about 20 locations on its website. Forma Brands, Morphe’s parent, said in a statement that it’s shutting down its physical stores to focus on ecommerce and wholesale.
Partnerships with powerhouse internet celebrities such as Jeffree Star and James Charles helped revenue top $400 million in 2019, according to a company presentation from December 2021 reviewed by Bloomberg. But Morphe severed ties with them after Star was accused of using racist language in 2020. And allegations of sexual misconduct plagued Charles in 2021.
Revenue dropped as social media influencers lost favor with consumers
Results at Forma, which generates about 80% of its sales from Morphe, have since suffered. Revenue missed internal planning by about 20% in 2021, according to the document. In the first 10 months of that year, revenue tied to Charles, Star and Jaclyn Hill — another social media star — fell 66% to $32 million.
Morphe, known for its accessibly priced eye shadow palettes and frenzied store openings, relied on social media presence.
“It’s a risky model,” said Kelly Dobos, a cosmetic chemist who works as an industry consultant. Influencers “always become less relevant.”
Ending relationships with Charles and Star left the company with an abundance of inventory it had trouble selling, according to a former employee who asked not to be identified. The company also spent heavily to launch a makeup line with pop star Ariana Grande, but sales disappointed, according to a second former employee.
Morphe, founded in 2008 and based in Los Angeles, won fans with cheaper options often tied to influencers with huge fanbases — Star and Charles each have more than 15 million followers on YouTube.
Morphe ranks No. 312 in the Digital Commerce 360 Top 1000.
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