Over ten years after its founding, Beautycounter abruptly terminated its distributors and announced it was ceasing operations, leading to many questions about what happened to the business.
Beautycounter is a cosmetic and skincare company which was known for its “clean beauty” products. Founded by CEO Gregg Renfrew in 2013, the company capitalized on the growing interest in cosmetics made from natural and organic ingredients instead of chemicals. It famously utilized a “Never List” of over 1,800 harmful chemical ingredients that its products would never use. Within a few years, Renfrew had built a billion-dollar business out of Beautycounter.
The business wasn’t without its controversies, though, as many criticized its MLM marketing strategy. Beautycounter has recruited over 65,000 distributors to promote its products and recruit other distributors. These distributors aren’t paid employees but are granted commissions for the products they sell and the products their recruits sell. However, Beautycounter’s advertising misled many distributors into paying for starting kits and courses by making them think they’d earn money, even though it was discovered the vast majority of distributors made less than $1,000 annually.
Still, the company had tens of thousands of distributors and several full-time staff when it abruptly announced its closure.
Did Beautycounter really shut down?
Last month, all of Beautycounter’s distributors received an e-mail notifying them of their termination. As of April 26, 2024, all final payments have been made, and distributor sales have ceased. However, there has been much confusion about the nature of the closure. The path to Beautycounter’s closure began in 2021 when The Carlyle Group purchased a majority stake in the business. Shortly after selling the majority stake to the private equity firm in what is believed to be a $1 billion deal, Renfrew was replaced as CEO by Marc Rey.
Unfortunately, things started to go downhill for the business, as all of The Carlyle Group’s new initiatives to bolster the business failed. Eventually, The Carlyle Group approached Renfrew to offer her the position of CEO once more, which she accepted. In January of 2024, she spoke to CNBC about her return as CEO and expressed optimism about turning the company around and ushering in a “new state of growth.” Soon, Renfrew got more back then her CEO position. In April, The Carlyle Group’s struggles with Beautycounter grew so severe that it decided to sell the business to Renfrew, who bought it back from foreclosure.
Shortly after she bought back Beautycounter, the distributor and employee terminations occurred, with the company’s New York and Denver brick-and-mortar stores closing and the website shutting down. However, the website did hint at a new business taking Beautycounter’s place. Essentially, what happened is that Beautycounter did not shut down. Instead, its business holding company, Counter Brands LLC, is ceasing operations. Currently, Renfrew is working on creating a new LLC to relaunch Beautycounter under. While a few employee terminations were permanent, it is believed the vast majority of employees and distributors will be welcomed back once the new business opens. Temporary terminations were a necessity for closing the LLC.
The only problem is that Beautycounter initially promised to return within two weeks. However, instead of promising to return by early May, the website now merely mentions coming back “later this year.” In an email to distributors, Renfrew explained that Beautycounter’s economic situation was worse than anticipated, so it was pushing its relaunch back to late 2024.
Many former distributors and employees were eager for the business to return and had faith they’d be welcomed back. It’s unclear what all these individuals will do now that their temporary termination has been extended to an undisclosed date.
(Featured image: Leon Bennett / Getty)
