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Was The Writing on the Wall? Carol's Daughter Companies File for Bankrupty

11:13 AM



Article also available on Black Girl with Long Hair!

This past Thursday, news got around through sources from Wall Street Journal to Clutch Magazine online that companies under the Carol's Daughter name had filed for Chapter 11 Bankruptcy Protection.

WHAT?!

You read correctly. Companies under the Carol's Daughter banner are folding. To paint a clearer picture, it should be understood that there are several companies under Carol's Daughter, and the primary focus of the Chapter 11 filing is on those companies under the umbrella of CD (Carol's Daughter) Stores, LLC -- of which parent company Carol's Daughter Holdings, LLC is the 100% owner. Another point of clarity: Carol's Daughter Holdings, LLC is not filing for bankruptcy. Essentially, the Carol's Daughter Stores umbrella and the companies underneath it (each store was a separate company) filed for Chapter 11 in an effort to close their doors permanently.

So what exactly happened?

I reached out to a Carol's Daughter rep, but unfortunately I did not receive a response. But I did find this juicy tidbit in the Wall Street Journal:

According to Chief Financial Officer John Elmer, most of the Carol's Daughter stores across the nation had been unprofitable since 2010 (stick a pin right there, we'll be back to revisit this in a second). Prior to the bankruptcy filing, 5 of the 7 Carol's Daughter stores had been closed and 29 of 42 employees were terminated. Chief Executive Officer (stick another pin right there) Richard Dantas had this to say: "Today's filing in no way reflects the parent company's healthy financial situation, and is a part of its plan to grow the brand through national retail outlets." Dantas also pointed out that Carol's Daughter products are available in a number of major retail locations nationwide, and that the company is refocusing its distribution strategy to focus more on these retailers.

As it currently stands, Carol's Daughter products are available online and on the ground at major retailers including Target, Ulta, Sephora, and even the Home Shopping Network.

Now that we've got the technicalities out of the way, let's have a candid discussion about what's REALLY happening. I remember when we Angelenos got our own Carol's Daughter store in Westfield Culver City (formerly Fox Hills Mall) in the late 2000s. It was an exciting time -- an affirmation of our value (consumer dollars), and a source of inspiration and empowerment (supporting Black-owned business). I remembered many trips to the mall, and seeing ladies very excited to support the store. But as the years went on, the fanfare dwindled and the landscape changed. In fact, when I went to the mall last weekend, the Carol's Daughter store was closed.

In digging around online to put together this article, what shocked me the most is that Lisa Price is not the CEO of the company she founded. Or owner, for that matter. Everyone knows that she teamed up with Steve Stout and was able to solicit millions of  dollars in investments from the likes of Jay-Z, Will, and Jada. As a result, Price surrendered an unspecified ownership stake in the company she created. A little more prodding online produces all sorts of information and records from the likes of Businessweek, that displays Lisa Price as only Founder and President of Carol's Daughter. In fact, Carol's Daughter Holdings, LLC (the parent company) is owned by Pegasus Capital Advisors, L.P. Now, I don't have an MBA or anything but the words "owned by" are pretty crystal clear. When you don't own things, you have no say in what is done with them.

Is this where all that "polyethnic" jargon came from?

The messaging of the entire Carol's Daughter brand changed -- starting with the 2011 campaign to change the color widen the appeal of the product line. Banners and posters featuring Selita Ebanks, Solange Knowles, and Cassie were rolled out. A brand of products formerly marketed to only Black women now adopted a "polyethnic" scope based upon changing census data (that indicated a rise in women that identified as bi or multi-racial), virtually abandoning the clientele that built the foundation that the business stands on. Droves of Black women pumped the brakes on their support of Carol's Daughter, feeling abandoned and maligned by the new campaign for colorless beauty. Formula changes and price hikes aside, many Black women continued to support Carol's Daughter because they believed in the Black-owned brand. But Price's feelings of "...perpetuating the idea that Carol's Daughter is a brand for Black Women with natural hair alone can be limiting", coupled with the new marketing campaign, was the straw that broke the camel's back.

Fast forward to 2014, and the closest thing I can find to a brand ambassador for Carol's Daughter is Naptural85 -- whom many naturals of all walks adore. Long gone are the celebrity spokespeople -- they've been replaced with 3 models that are a slight improvement over the previously mentioned ladies in terms of diversity. Products like Hair Milk, Margeurite's Magic, and Mimosa Hair Honey are sporting banners that say "same size, $5 less". It almost seems like Carol's Daughter is learning their lesson in biting the hands that fed them. But is it too late? I can't help but noticing that Carol's Daughter selections at places I frequent (like Ulta and Target) are never really moving, or out of stock. But, maybe that's just an LA thing.

Carol's Daughter might have been a pioneering brand in natural hair, but the playing field is wide open. They've got tons of competition from brands who have successfully transitioned to major retailers, or who have tons of online business coming in without compromising ingredient quality. And even while they're closing stores to focus on a distribution model that appears more in line with their goal to reach a broader consumer base, smaller brands like Cream and Coco are opening brick and mortar stores to expand and achieve the same end. Camille Rose Naturals, Alikay Naturals and Oyin Handmade made it to Target without alienating their customer bases.

So what's really going on over at Carol's Daughter? Is it really about closing stores to focus on distributing to major retailers, or is this a sign of their struggle to stay relevant without the support of the customers that built the brand? Weigh in, ladies!

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4 comments

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    1. L'Oreal cosmetics purchased Carols Daughter. Se this: http://www.blackenterprise.com/lifestyle/loreal-acquires-carols-daughter/

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  2. I'm pretty sure Shea Moisture is heading that way in a few years. They've started to abandon I.e 'diversify' their base target, to change I.e heaven and dilute their ingredients. The market indeed is wide open, and consumers are ever more savvy and educated. I personally am switching to DIY for almost all my hair and skin needs

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