Hi everyone! I hope you've all had a fantastic and hopefully long Presidents' Day weekend and are energetically tackling this week. Here’s the rundown for this week’s newsletter:

In a recent interview in CFO Brew with e.l.f. Beauty’s CFO, Mandy Fields, she outlined her take on the “death of the Lipstick Index”.

The origin of this term, when Leonard Lauder coined it in the early 2000s, was a bit before my time, so I had to do some research that took me down a rabbit hole.

The fascinating part up front: Just before the collapse of Lehman Brothers in 2008, there was a surge in search volume on Google for the term ‘lipstick’ (you can see for yourself here).

Correlation does not equal causation, though, for the conspiracy theorists out there!

Similarly, when the world was coming off the short-lived Covid recession and facing the highest inflation rate in recent history, there was still a massive spike in ‘lipstick’ search volume (at least once a majority of the mask mandates were lifted).

Let me explain: the then-chair of Estée Lauder opined that a downward pressure in discretionary consumer spend for big-ticket items such as homes, vacations, and cars actually produces an increase in smaller-ticket items, such as beauty products, which he noticed in their own sales data.

A 10% price increase on a house (or any other costly indulgence) quickly busts the budget, but, so goes the theory, the consumer will still want to treat themselves on a more affordable luxury — like a lipstick.

So, the Lipstick Index has an inverse correlation to the macroeconomic environment.

In the interview, e.l.f. Beauty’s CFO is touting their 28th consecutive quarter of market share growth, so the question beckons: Since three-quarters of e.l.f.'s portfolio is priced at $10 or less, is their continuous market share gain a bearish signal for the macroeconomic environment?

I think the answer is no. There is truth to Fields’ assessment that the Lipstick Index has changed over the years and we are now seeing more cautious and conscious consumer spending that is willing to trade-down within categories from prestige to masstige. Plus, the economic data looks better than a lot of us guessed!

It is obviously too early to draw any conclusions, but, with an optimistic take on the most recent softening CPI statistics and better-than-expected labor numbers, it is not entirely unreasonable to be cautiously hopeful that we will actually be able to stick the much-needed soft landing of the economy.

Look, this is my (admittedly) non-expert opinion on all of this, but it was fun to write about, so if you disagree (or think this was a brilliant take), email me at [email protected] with your thoughts!

Two weeks ago, in the last edition of Beauty Bytes, we discussed the potential for a wide-open IPO window in 2026 for companies big and small. However, the proverbial window snapped shut as quickly as it opened.

After the recent software stock selloff, Clear Street Group postponed what was expected to be that week’s biggest IPO, immediately after cutting both size and price range.

Turns out the IPO window is less a window and more a revolving door. Opportunities come and go and 2026 will surely be an interesting dealmaking year. Let’s dive in:

LVMH (EPA: MC) is exploring a sale of heritage makeup brand Make Up For Ever and weighing options for skincare label Fresh, as it reshapes a beauty portfolio that has seen makeup come under pressure from indie competitors and softer global demand, as reported by BeautyMatter.

Both Make Up For Ever and Fresh are loss-making, with Make Up For Ever generating roughly €300m in annual net sales but eight consecutive years of losses, which sits awkwardly next to higher growth, higher margin engines like Dior, Guerlain, and the newly launched Louis Vuitton Beauté.

Osmo, an AI-powered fragrance design startup, closed a $70 million Series B round led by Two Sigma Ventures, bringing total funding to $130 million. New backers include Valor, Atreides, Amplo, Collab Fund, Alumni Ventures, Lumina Partners, and Stripe CEO Patrick Collison.

Osmo, spun out of Google Brain in 2022, uses its proprietary "Olfactory Intelligence" platform to take fragrance from formula concept through manufacturing, targeting both large CPG companies looking to cut costs and smaller brands that previously couldn't afford custom fragrance development. Learn more.

The Estée Lauder Companies (NYSE: EL) reported Q2 FY2026 net sales up 6% to $4.2 billion, with skincare (+6%, led by La Mer and The Ordinary) and fragrance (+6%, driven by Tom Ford and Le Labo) as top performers, while color cosmetics declined 1%. They raised their full-year organic net sales growth forecast to +1-3%, its first projected operating margin expansion in four years.

Shares fell ~20% on the day, as guidance came in below some Wall Street estimates. The company also wrote down $258M of goodwill related to TOM FORD and Too Faced, signaling the ongoing challenge in the color cosmetics segment.

Beauty Bytes previously reported on Estée Lauder’s divestiture plans. However, WWD reported that Estée Lauder is no longer marketing Too Faced, Smashbox, and Dr. Jart+ as a bundle.

Instead, Too Faced and Smashbox are being shopped together as a makeup package, while Dr. Jart+ is being sold separately. The brands are expected to sell at a steep discount. Estée Lauder paid $1.45B for Too Faced alone in 2016.

Bubble Skincare, one of the first mass-market skincare lines built for Gen Z and Gen Alpha, has hired Centerview Partners to explore potential acquirers, with net sales estimated between $100 million and $150 million, per WWD.

Founded in 2020 by Shai Eisenman, Bubble has scaled via the force of its 3.7 million–strong TikTok community and distribution in more than 12,000 doors including CVS, Walmart, Ulta, Target and Boots, putting it among the most visible teen skincare platforms in beauty.

Coty (NYSE: COTY) announced a restructuring plan (unveiled by Interim CEO Markus Strobel, who took over in December 2025) in their most recent earnings call. Coty shares have fallen ~25% since.

Net sales declined 3% in Q2 FY2026, and the company is continuing its strategic review (led by Citi) of its $1.2B mass color cosmetics portfolio (CoverGirl, Rimmel, Sally Hansen, Max Factor) and its $400M Brazil business, assessing divestitures, spin-offs, and partnerships.

Salt & Stone, the Los Angeles body-care label founded in 2017 by former pro snowboarder Nima Jalali, has hired Raymond James to explore a sale, with sales said to be around $150 million, according to WWD.

The fragrance-forward brand, which sells one product roughly every seven seconds and counts Sephora, Erewhon and Nordstrom among its partners, has already attracted a minority investment from Humble Growth as it positions itself as a global “elevated essentials” body-care player.