Avon, the cosmetics giant famous for its door-to-door sales, has filed for Chapter 11 bankruptcy in the U.S.
The company is facing over 100 lawsuits claiming its talcum powder products cause cancer.
This move is aimed at managing debt and addressing these legal challenges.
The talc controversy isn’t unique to Avon.
Other big names in the beauty industry, like Johnson & Johnson, are dealing with similar issues.
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These lawsuits argue that talc, a mineral used in many cosmetic products, may contain asbestos, which is known to cause cancer.
Avon strongly denies these claims.
Revlon filed for bankruptcy as competition from online-focused upstarts took its toll. The company in recent years had lost shelf space to startups backed by celebrities, such as Kylie Jenner's Kylie Cosmetics and Rihanna's Fenty Beauty https://t.co/g68LO2BTsd pic.twitter.com/Xg6Rkx77Iv
— Reuters (@Reuters) June 17, 2022
The company says it “only uses cosmetic grade talc which has been tested to confirm that it does not contain asbestos.”
Despite this, the flood of lawsuits has forced Avon to take drastic action.
Johnson & Johnson has tried a similar approach, attempting to use bankruptcy to handle its talc-related legal troubles.
While J&J’s efforts have been rejected by courts so far, the company recently made progress towards a potential $6.5 billion settlement for thousands of lawsuits.
It’s worth noting that Avon’s bankruptcy only affects its U.S. holding company.
The company says its international operations will continue as usual.
This means Avon products will still be available in many countries around the world.
In fact, Avon has been working on updating its business model.
Revlon filed for bankruptcy as competition from online-focused upstarts took its toll. The company in recent years had lost shelf space to startups backed by celebrities, such as Kylie Jenner's Kylie Cosmetics and Rihanna's Fenty Beauty https://t.co/g68LO2BTsd pic.twitter.com/Xg6Rkx77Iv
— Reuters (@Reuters) June 17, 2022
Last year, it announced plans to open physical stores in the UK for the first time in its long history.
An Avon representative explained this change, saying, “Now they [women] are going out to work and we have to follow them wherever they spend their time and make the service as convenient as possible.”
The talc lawsuits and bankruptcy filing are big hurdles for Avon.
But the company’s efforts to change with the times show it’s not giving up.
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How this plays out could have big impacts on both Avon and the wider cosmetics industry.
