The company filed for Chapter 11 in Delaware on Monday as it seeks to address 386 individual talc-related cases, according to its petition.

The firm has already incurred in $225 million of costs defending personal injury lawsuits and settlement payments and doesn’t have “sufficient liquidity to litigate and/or settle” the cases, its Chief Restructuring Officer Philip Gund said in court filings. The company expects the number of lawsuits “will only continue to increase absent a permanent solution.”

Avon Products is the latest company to seek bankruptcy in order to deal with lawsuits stemming from the sale of talc products. Most notably, Johnson & Johnson has tried to settle with plaintiffs using bankruptcy multiple times and is yet to succeed.

Avon Products is a holding company that sold its US operations in 2016, according to a separate statement. The now-bankrupt entity owns the brand outside the US and its international business. It has $1.3 billion of debt mostly owed to Brazil-based Natura & Co, which acquired it in 2020, it said in court documents.

As part of the Chapter 11 filing, Avon Products’s assets will be marketed, with Natura offering to buy it for $125 million in the absence of higher offers. As part of its bid, the Brazilian company will write off $530 million of debt it’s owed and provide an additional $43 million to fund the bankruptcy, according to the filings.

The Avon brand in the US is owned currently by LG Household & Health Care Ltd. and is not part of the bankruptcy. The international operations aren’t part of the bankruptcy and are operating as usual, according to the statement.

The bankruptcy is AIO US Inc., 24-11836, US Bankruptcy Court for the District of Delaware.

This article was written by Jeremy Hill, Jonathan Randles and Lucca de Paoli from Bloomberg and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.

Swiss sneaker giant On reported net sales of CHF 567.7 million ($654.4 million) in the three months ending June 2024, up 28 percent from the same period last year and setting a new record for revenue for the second straight quarter.

However, shares were down as much as 10 percent in pre-market trading Tuesday, after its quarterly gross margin of 59.9 percent narrowly missed Wall Street estimates of 60.1 percent, while its direct-to-consumer revenue and earnings per share also fell just shy of analyst expectations. The company’s shares are still up 47 percent since the beginning of the year.

On received a boost from its recent expansion into apparel and accessories, sales of which were up 63 percent and 24 percent year-on-year, respectively. The brand, which began as a running sneaker specialist, was also buoyed by its expansion across Asia — particularly in China and Japan — where it grew sales by 85 percent year-over-year in the second quarter.

On also reported healthy bottom-line growth, generating net income of CHF 30.8 million, nearly 10 times the CHF 3.3 million it earned in the second quarter of 2023.

On reaffirmed its guidance for full-year 2024, forecasting a gross margin of around 60 percent and record net sales of CHF 2.26 billion ($2.6 billion).

In March, the company launched its tennis apparel category, and the following month it announced a partnership with British singer FKA Twigs, who will oversee the design and marketing of the company’s new training apparel and footwear vertical. On also signed Zendaya as its latest ambassador in June — a move designed to grow the brand’s visibility in North America and promote its lifestyle apparel. The actress has already starred in several high-profile campaigns for the brand with ambassador and shareholder Roger Federer.

Learn more:

Swiss Sportswear Brand On Taps Zendaya as Latest Ambassador

The American actress will co-produce brand campaigns and collaborate on one-off collections as the label continues its expansion beyond the running category.

🇨🇳 Accessories brands refine marketing strategies for China’s Qixi Festival. This year’s Qixi Festival, a traditional holiday celebrating romantic love which fell on Aug. 10, saw jewellery brands like Tiffany & Co. and Chow Tai Fook invest in special product lines, advertisements, endorsements and other marketing campaigns. The festival, which follows western Valentine’s Day and the 520 holiday earlier in the holiday calendar, also provided luxury brands with an opportunity promote dedicated accessories like a handbag from Alexander McQueen, Bally shoes, Michael Kors sunglasses and beauty products with themed packaging from the likes of Givenchy, Gucci and Valentino. [Tatler Asia, Jing Daily]

🇧🇩 Factories reopen after Yunus leads Bangladesh’s interim government. The decision to tap the Nobel Prize-winning, development banker was announced by the office of President Mohammed Shahabuddin, who had earlier met with the country’s armed forces and protest leaders, who called for Yunus to take the role following former Prime Minister Sheikh Hasina’s ousting. Factories in the world’s second-largest garment exporting country reopened on Wednesday hoping to swiftly resume full operations after production was disrupted by violent protests. [BoF]

🇵🇰 Pakistan denim giant Artistic Milliners acquires VF’s Mexico facility. The Karachi-based vertically integrated denim manufacturer has bought the Dickies de Parras S. de RL de CV facility from US fashion conglomerate VF Corp. in its latest nearshoring move to be closer to the US market, following its acquisition of what is now the SFI factory in the Los Angeles area of the US and the opening of an SFI sourcing office in Guatemala. [Sourcing Journal]

🇦🇺 Simone Arnol wins at Australia’s National Indigenous Fashion Awards. The Gunggandji woman won fashion designer of the year at last week’s award ceremony in Darwin, following the Country to Couture runway showcase, supported by Indigenous Fashion Projects. Jay Jurrupula Rostron prevailed in the textile category; Philomena Yeatman in traditional adornments; and Denni Francisco of Ngali in business achievement. [Vogue Australia, Guardian]

🇮🇳 Losses widen at India’s Aditya Birla Fashion & Retail Ltd. The group has reported consolidated net loss of 214.92 crore rupees ($25.6 million) for the first quarter ended June 2024, compared to a loss of 161.62 crore rupees for the same period last year. ABFRL’s holdings include Pantaloons, Sabyasachi, Tasva, multi-brand retailer The Collective and Galeries Lafayette India whereas a demerged listed entity called Aditya Birla Lifestyle Brands Limited (ABLBL) includes brands and partnerships such as Louis Phillippe, Van Heusen, American Eagle, Forever 21 and Reebok. [Economic Times]

🇳🇬 Nigeria-founded pan-African e-tailer Jumia sees revenue fall in Q2. The company operating in Algeria, Egypt, Ghana, Côte d’Ivoire, Kenya, Morocco, Nigeria, Senegal, Tunisia and Uganda has reported a decline of 17 percent year over year to $36.5 million. The New York-listed firm, which sells everything from fashion and beauty to electronics and food, blamed currency devaluation in the markets where it operates. [Semafor]

🇨🇳 Ralph Lauren beats profit estimates on stable demand in China, Europe. The US firm reported a 1 percent increase in Q1 revenue to $1.51 billion, beating profit estimates as steady demand for its products in Europe and China offset slower sales in the US. Steady appetite from wealthier consumers has also driven demand at companies such as Canada Goose and Miu Miu-owner Prada, even as their rivals signalled cooling luxury demand due to challenges in China and a pullback in spending by aspirational shoppers. [BoF]

🇮🇳 Indian beauty group Honasa Consumer sees profit surge in Q1. The beauty and personal care group whose portfolio includes brands offering products with natural, organic, ayurvedic and vegan ingredients, such as Mamaearth, Aqualogica, Aqualogica, The Derma Co, Ayuga and Bblunt, has posted 63 percent year over year growth in consolidated net profit to 40 crore rupees ($4.7 million) for the quarter ended June 2024. [Economic Times]

🇨🇳 VF posts smaller revenue drop than expected on better China demand. VF Corp reported a smaller-than-expected drop in first-quarter revenue, helped by improvement in its China business as well as leaner inventory levels, sending its shares up about 7 percent in extended trading. Sales in the American company’s Greater China business were up 4% on a constant currency basis, as the company benefited from a better product assortment and newer styles. [BoF]

🇮🇳 Footwear giant Bata India reports 62% quarterly profit surge. The Gurugram-based company manufacturing and retailing namesake Bata and brands like Power and North Star has posted 174.36 crore rupees ($20.7 million) in consolidated net profit for the quarter ended June 2024. The India unit is part of Bata Corporation, a Swiss-based multinational group selling 150 million pairs of shoes annually across 70 countries, manufacturing in 21 factories across 18 countries. [Economic Times, BoF]

🇱🇰 Sri Lankan textile manufacturer Teejay reports 10% revenue growth in Q1. The company, which supplies to Nike, Uniqlo, PVH and Decathlon among other brands, has posted revenue of 15.4 billion Sri Lankan rupees (approximately $51.11 million) for the first quarter and gross profit of 1.3 billion Sri Lankan rupees. Chairman Ajit Gunewardene credited “several initiatives… to broaden the group’s synthetic footprint [to develop] new product lines.” [Fibre2Fashion]

🇨🇳 Coupang posts first loss since 2022 as Farfetch deal saps profit. The New York-listed e-commerce giant founded in South Korea has posted a net loss of $77 million for the June quarter, versus an average estimate for a loss of $11.7 million. Excluding Farfetch and a fine from the Korean authorities, Coupang’s second-quarter net income came to about $124 million. However, the losses overshadowed resilient top-line growth. [BoF]

🇮🇳 Traditional wear brand Shobitam acquires Indian sari brand Isadoralife. The direct-to-consumer brand co-founded by Aparna and Ambika Thyagarajan in the US in 2019 and based between Seattle and Bengaluru has bought the sari brand founded by Neha Tandon Sharma for an undisclosed amount. [Economic Times]

🇦🇪 Abu Dhabi sovereign wealth fund to acquire a minority stake in Sotheby’s. ADQ, a sovereign wealth fund for the emirate formally known as Abu Dhabi Developmental Holding Company PJSC, will acquire an undisclosed minority interest in the UK-based auction house, which operates luxury jewellery and art auctions as well as other categories like cars and real estate. [BoF]

🇨🇳 Shiseido Company’s Q2 sales drop 4% as US business slumps. The Japanese beauty conglomerate which owns brands such as Drunk Elephant and Nars, its namesake brand and fragrances licences like Narciso Rodriguez and Zadig & Voltaire, reported a net sales decline of 4 percent to $1.7 billion in the second quarter. Shares in the company fell sharply in morning trading in Tokyo on Thursday. [BoF]

🇮🇳 India’s IPO-bound Baazar Style Retail mobilises funds. The Kolkata-based value fashion retailer with over 150 stores said it has secured 37 crore rupees ($4.4 million) from Volrado Ventures Partners Fund II for a pre-IPO round, effectively reducing the issue size from 185 crore rupees to Rs 148 crore rupees. [Economic Times]

🇵🇰 Pakistan’s annual textile & apparel exports rise to $16.6 billion. The country’s fashion exports rose by 0.93 percent in the 2024 financial year. The knitwear category fell slightly, while the non-knit garment and cotton yarn categories were up during the period. [Fibre2Fashion]

🇦🇺 Tessa Ogle is named editor-in-chief at Cosmopolitan Australia. The former digital managing editor of fashion and beauty at Elle Australia and Marie Claire Australia has taken on the lead editorial role at the relaunched title, a venture between Katarina Kroslakova’s local publishing house KK Press and Hearst Magazines International. [Diary Directory, Ad News Australia]

🇮🇳 Indian menswear brand Halden raises 5 crore rupees in funding. The Mumbai-based luxury brand founded in 2019 by Mukund Singhal and Anuj Beriwal has secured the investment worth approximately $600,000 in a seed funding round led by Prajay Advisors, a Mumbai-based private wealth management family office. [Economic Times]

🇰🇷 Gucci taps South Korean musician Jin as its ambassador. The Italian luxury brand has partnered with Kim Seok-jin, better known as Jin, a member of K-pop band BTS, which has been on hiatus while the band members complete mandatory military service. [Economic Times]

🇮🇳 Amazon’s India country manager Manish Tiwary resigns. The e-commerce major has announced that the executive who had been with the company for eight years will leave after October. In the meantime, “Amit Agarwal, SVP India and emerging markets, will remain closely involved the Amazon.in team,” the company said in a statement. [Economic Times]

🇳🇬 Talent incubator Qasimi Rising partners with Lagos Fashion Week. The initiative founded in 2022 by Emirati Sheikha Hoor Al Qasimi, head of the London-based fashion brand Qasimi which was founded by her late brother Khalid Al Qasimi, has named Lagos Fashion Week founder Omoyemi Akerele as its regional ambassador in a bid to extend its reach to more African designers. [The National]

Multinationals have a puzzle that they need to tease out in China, the world’s biggest market for luxury products: What’s driving a slump in sales? Is it because a slowing economy is leading people to tighten their belts, or a sign that the Chinese no longer believe many brands can hold their value?

This question matters because it affects luxury houses’ long-term prospects. If the problem is just a weak economy, they might accept recent earnings as a temporary rough patch and carry on business expansion as before. But if people start to see luxury products as mere commodities, brands have a much bigger problem and must start to cut back on supply and restore scarcity value.

In particular, executives need to worry about speculators. Just like trend-chasing quant funds and Japan’s Mrs. Watanabe, they take one-way price bets and no one in the industry really knows the scale of the gamble. The only difference, perhaps, is the lack of leverage — carry traders, for example, would typically take out cheap loans to invest in something that has higher returns.

This phenomenon is likely to be pronounced in China. After all, Chinese are a pragmatic bunch. Even when the economy was doing well, many buyers were making an investment case for their purchases. For instance, Chanel’s classic handbags have been well-loved by fashionistas, in part because of their resale value. The iconic French brand has been speeding up price hikes since 2016, doubling the cost of its medium classic flap bag from $4,900 to $10,800. As online resale platforms blossomed, many consumers have been able to ride on Chanel’s price hikes and sell their second-hand items for a profit.

Chanel typically reviews handbag prices twice a year, in March and September. It raised the flap bag prices by 6 percent to 8 percent this spring, with all its models retailing for more than $10,000. This makes Chanel as much an investment as a good, encouraging both speculators and end-consumers to purchase the newest lineups.

But the presence of speculators can also ruin iconic brands. Kweichow Moutai Co., China’s most prestigious premium liquor distiller, is a good cautionary tale. From 2016 to early 2021, the wholesale price of its iconic Feitian baijiu rose 358 percent to a peak of 3,850 yuan ($536) per 500-millilitre bottle, drawing in an army of hoarders. 

Prices of Moutai started to drop this spring, according to Bloomberg Intelligence’s Ada Li. But it was the big midyear e-commerce shopping festival in June that broke the camel’s back. JD.com Inc. sold Feitian at only 1,499 yuan per bottle as a way to draw shoppers to its platform.

While the wholesale price seems to have stabilised in early August, investors have lost faith in this household brand. There’s now worry of oversupply and that speculators might be keen to lock in profit before the situation worsens again. UBS Group AG estimates that hoarders have piled up about 14 months’ worth of Moutai liquor supply over the years, with an average purchase cost of 2,079 yuan a bottle.

As China suffers from an economic Long Covid, it’s clear that brands with better resale value are much more resilient. Last year, the prices of Hermès International SCA’s second-hand products continued to grow, while many other luxury brands, including LVMH Moet Hennessy Louis Vuitton SE’s Louis Vuitton and Dior experienced a decline, according to Bernstein Research. This perhaps explains why Hermès’ earnings in the second quarter were a lot prettier than LVMH’s. Kering SA, meanwhile, is at the bottom end of the table because its flagship, Gucci, has too many discounted channels, from private sales to outlet stores, mostly in Asia. Second-hand Gucci sells at about a 40 percent discount.

For now, the likes of Chanel and Hermès may take comfort that they can still raise prices amid this weak macro backdrop. But they need to be careful with inventory management. Past steady annual price increases have already drawn in one-way bets, not unlike how the Bank of Japan’s yield curve control attracted macro tourists to the yen carry trade. When the game of musical chairs stops — as markets feared in a rout early last week following a hike in interest rates — the unwinding can be very ugly.

By Shuli Ren

Crown Laboratories, owner of Blue Lizard sunscreen and the premium skincare line Strivectin, announced on Monday a merger with medical aesthetics firm Revance. Revance, which has been listed on the Nasdaq since 2014, makes injectable treatments such as plumping hyaluronic acid fillers and Daxxify, a Botox alternative.

Under the agreement, Crown will make a tender offer to acquire all of Revance’s outstanding common stock shares for $6.66 in cash, an 111 percent premium to its 60 day volume-weighted average price, giving the business a total enterprise value of $924 million. As a result of the transaction which is expected to close by year-end, Revance will be delisted from the Nasdaq and the new company will be a private entity.

Revance is not profitable, and has made a loss each year since it was founded in 2002 with an accumulated deficit of $2.2 billion. In its second-quarter results published last week, net revenue increased 20 percent to $65.4 million, but the company said it expected to incur operating losses for the foreseeable future.

In a statement, Jeff Bedard, founder and chief executive of Crown, said the merger was a cornerstone of realising its long-term plans in the medical cosmetics space. “This is a significant step forward in Crown’s vision to become a fully integrated global aesthetics and skincare company,” he said.

Mark J. Foley, Revance’s chief executive, said the transaction would allow the company to broaden its provider network and offer more products.

The companies share synergies: Crown makes the popular SkinPen system, used for anti-ageing microneedling treatments, and a system designed for platelet rich plasma (PRP) facials, another trendy treatment popularised on reality television shows.

Crown sold the premium tanning brand Vita Liberata back to its founder, Alyson Hogg, in April, at more than a 50 percent discount.

The aesthetics space, which benefited from a post-pandemic “Zoom boom” is gaining momentum. Last week, L’Oréal announced it had gained a 10 percent stake in Swiss injectable maker Galderma.

Sign up to The Business of Beauty newsletter, your complimentary, must-read source for the day’s most important beauty and wellness news and analysis.

Learn more:

Lashes, Brows, Botox: How Much is Too Much?

No longer the domain of the elite, lash extensions, brow treatments, injectables and more have become part of mainstream consumers’ beauty maintenance routines. But online backlash is brewing against growing pressure for elaborate upkeep.