When the economy grows tight, Americans cut back on their beauty purchases, according to market analysts. 

“Among all merchandise categories, including household goods, toys, pet food, vitamins, fitness, makeup, and skincare are the categories that rank highest for consumer intent to reduce spending. The leading reason for consumers wanting to spend less on makeup and skincare is a belief that makeup and skincare prices are too high,” according to surveys conducted by global management consultancy McKinsey & Co.

Consumers reported to McKinsey that they stocked up on beauty products during promotional periods.

“There was this notion, particularly when we spoke to this most recent panel of consumers at the end of December, that ‘I reduced because I had purchased previously,’” Alexis Wolfer, associate partner at McKinsey, shared with Beauty Independent.

TheStreet advisor and RTMNexus CEO Dominik Miserandino sees a downturn in the space.

“In the past, you might have had an industry based on hype. Now, you have a generation walking in cautious of everything. Combine that with the economy, where people are price cautious, we are always looking for these alternatives that might be the next cheapest thing they find on TikTok,” he shared.

It’s a challenging market that has led to big changes, including the end of Target’s and Ulta Beauty’s partnership, as well as Adwoa Beauty moving its Chapter 11 filing to a Chapter 7 liquidation.

Adwoa Beauty CEO shares battle with lenders

Adwoa Beauty filed for Chapter 11 in October 2025, according to documents filed on PacerMonitor.

At the time, the company hoped to negotiate with its creditors and continue operations.

Adwoa Beauty founder Julian R. Addo has used her personal Substack to share her experience since the company filed for Chapter 11 bankruptcy.

“In late 2024, with $400K+ of Sephora purchase orders in hand and no way to fund production, I engaged Aurous Financial for purchase order financing. Aurous suggested I bring on Michael Schreck of Reserve Capital Group, as fractional support to help me turn the company around, we secured Versant Funding as a factoring facility meant to work in tandem with Aurous,” she wrote.

Addo explained that the way the funding was set up, “they need to have both lenders and the retailers would pay them directly, bypassing me. the lender would pay me after they both were paid. I thought this was ‘safe,'” she wrote.

The CEO shared a series of emails that show how her relationship with her funder deteriorated, something she believes was intentional.

“What I did not fully understand, what I suspect many founders do not understand until it is too late, is how badly this machinery can be weaponized when the people operating it choose leverage over partnership,” she added.

Adwoa Beauty moves from Chapter 11 to Chapter 7 bankruptcy

A judge has ruled that the brand enter a liquidation process through Chapter 7 bankruptcy, according to PacerMonitor filings.

The conversion means that the business must cease operations and turn its intellectual property and assets over to a court-appointed trustee for sale.

Aurous Financial Services filed a motion in the US Bankruptcy Court, Northern District of Texas, to convert the case to a Chapter 7 Bankruptcy.

This motion was granted in a hearing on 1 May, according to court documents.

“If Aurous wasn’t here, it would be a normal Chapter 11 where the business confirms its debt, pays its creditors on a quarterly basis, and moves on,” Addo told Business of Fashion.

“For me, conversion at this stage was the best outcome. I fought a really long, hard battle alone, and it just takes too many resources and mental bandwidth to keep that up,” she added.

The company’s website shows all products as “sold out,” but directs shoppers to its partners, which may still have some inventory.

“You may shop Adwoa Beauty at one of our retail partners, Amazon, Fragrance.Net, Sephora U.S., Sephora Canada, Sephora U.K., Cult Beauty, and Shaba.”

A review of Amazon listings conducted by TheStreet on May 5 at 11:37 a.m. EST found multiple Adwoa Beauty products still in stock across several search results.

Adwoa Beauty may still have product in retail stores.

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Adwoa Beauty Chapter 7 bankruptcy timeline

  • Adwoa Beauty filed for Chapter 11 bankruptcy protection in October 2025 in the U.S. Bankruptcy Court for the Northern District of Texas, according to PacerMonitor.
  • The filing was structured under Subchapter V, a small-business reorganization pathway intended to allow the company to continue operating while restructuring debt, added PacerMonitor.
  • In May 2026, the bankruptcy case was converted from Chapter 11 to Chapter 7, shifting the case from reorganization to liquidation, according to Cosmetics Business.
  • The conversion followed creditor pressure and arguments that the company could not successfully reorganize under Chapter 11, added Cosmetics Business.
    Adwoa Beauty was founded in 2017 and expanded into retail distribution through partners including Sephora, Amazon, and Cult Beauty, according to AfroTech.
  • The company previously raised approximately $4 million in funding in a round led by Pendulum before later facing liquidity challenges, reported BKFN.

A Chapter 7 filing means the end of the company.

“A Chapter 7 bankruptcy case does not involve the filing of a plan of repayment as in Chapter 13. Instead, the bankruptcy trustee gathers and sells the debtor’s nonexempt assets and uses the proceeds of such assets to pay holders of claims (creditors) in accordance with the provisions of the Bankruptcy Code,” according to USCourts.gov.

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