Pat McGrath Labs has headed out of bankruptcy, but whether it can be made a success remains to be seen.
As a refresher the brand, best known for gold, multipurpose pigment and glass skin masks that once nabbed a $1 billion valuation, filed for Chapter 11 bankruptcy in January amid liquidity constraints.
Last week, GDA Luma, its new majority owner, said the brand is emerging from Chapter 11 protection. Founder Dame Pat McGrath will continue in her role as chief creative officer while relinquishing the chief executive officer title.
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Whether McGrath’s editorial view on makeup is commercially viable is still in question, as is the fate of an artistry brand that is now competing in a much more crowded market.
“She is without question the most renowned makeup artist in the world, with incredible talent,” said one industry source. “They have not been able to make a commercial business out of it as of late, so something would have to change.”
The leadership shifts could breathe new life into the brand, with the right strategy in place, the source continued. “If you look at the announcement, she is the chief creative officer, she’s not the CEO anymore. Do I think she’s great? Yes I do. Do I think that her products are great? Yes I do. Do I think it’s a sustainable business the way it’s being run right now? No, I don’t. Other [brands] have come back, but it’s challenging.”
Cassie Cowman, cofounder of View From 32, a beauty consultancy, added that it’s important that clarification is given for McGrath’s new role and involvement. “What she’ll be involved in, what she won’t be involved in,” Cowman said. “Of course, it sounds like those key pieces, creative and product and all of those things. Obviously, she was recently at Sephoria. There’s still this deep love, and admiration for her as an artist and for her brand.”
On the retail front, Cowman also stressed the importance of rebuilding those relationships.
“Just going in and being honest, being humble, asking the retailers where they see the opportunities, what the wins and misses were from their side, what the brand should do differently, what they’d like to see in a dream scenario, so that they feel they’re being listened to. The new owner can adapt and assure them that this is a new era. I think that’ll also help the retailers feel invested in the turnaround,” she said.
“It’s one of the big pieces,” Cowman continued. “Yes, this brand still has a tremendous amount of opportunity, but the timing is so crucial, and how long are the retailers willing to continue to be patient? I’m sure some big decisions have already been made from a real estate point of view. So really aligning on what does that timeline look like for a turnaround?”
Then it’s about recapturing that excitement that the brand is known for.
“It’s as simple as going back to what the brand was known for, and adapting it to today’s market. A lot has changed,” she said. “When you think of how exciting those drops were in the beginning of the brand, and how it just felt so unique, and it was so coveted. With TikTok, the cycle moves so quickly that I think that’s quite adaptable to today’s model, because it’s hard to capture the attention of the consumer. So if they can do the drops in a really compelling way that have Pat behind them, have a creator community, and they just feel unique and bring back that original spirit.”
Still, others are unsure if these highly editorialized products can be a commercial success.
Lucie Greene, the futurist who founded Light Years, thinks the path ahead is not dissimilar from McGrath’s fashion contemporaries.
“It’s like these esteemed beauty creators plugging in. It’s similar to fashion with Claire Waight Keller at Uniqlo or John Galliano at Zara,” she said. “I wonder generally about the commercial viability of editorial cosmetics trends, which is what she’s the queen of. I think there’s a tension with that being commercialized.”
One source, pointing to her viral looks at Maison Margiela’s spring 2024 show in Paris, said that iterating product off of McGrath’s greatest hits wasn’t an operationally feasible move.
“Maybe she came up with it just a week before the show. I don’t know how realistic it is to expect her to have that product right away,” the source said. “It’s like if you’re relaunching a fashion brand. You need to make a big splash, you need to make it go viral. Does she have a team to do that year-round?”
There’s also the question of who McGrath should target — and at what price point. “I really struggle with the relevance of the business and how you relaunch it with her,” the source said. “People don’t know how to assess the longevity of the makeup category. If they’re smart, they’ll try to do what Joey [Shamah] is doing with Laura Geller. But who is the audience? Is my mom buying Pat McGrath at that price point? I don’t know.”
