Cover FX Power Play Foundation

Cover FX may be ready for its next chapter.

The makeup business, which private equity firm L Catterton has backed since 2011, is said to have hired investment bank Jefferies to explore sale options. Sources said the business is expected to do $65 million and $70 million in gross sales with more than $10 million in earnings before interest, taxes, depreciation and amortization for 2018. A spokesman for Jefferies declined to comment. CoverFX declined to comment on the M&A process.

The brand is known primarily for its complexion and customization products. The business just launched Power Play Foundation, which is expected to roll out in all U.S. Sephora doors by the end of March, according to chief executive officer Sharon Collier. The new foundation line fills a hole in the Cover FX foundation offerings, Collier said.

“It’s a more modern matte. It doesn’t look flat, it has a luminosity behind it…we hadn’t really reached that normal to oily consumer that doesn’t really want shine,” Collier said. “We launched in 40 shades — we have three other foundations that also have 40 shades — that was not new for us.”

Industry sources estimated that Cover FX, including the launch of Power Play, is expected to grow 40 percent in 2018.

Power Play is the latest project of Collier, who Catterton brought into the business in 2012 (she was previously with Laura Mercier). It was during a period that industry sources described as a rough patch for CoverFX. Collier noted that when she started, there was a lot of work to be done.

“The reason everything got really quiet is we took an opportunity to reformulate,” Collier said. “The products were really for professional use and were highly pigmented — we made them a little more modern.” The reformulation included removing “potentially irritating” ingredients and adding “good for you” ingredients, Collier said. Cover FX’s products are paraben-, fragrance-, gluten-, mineral oil- and talc-free, as well as vegan. 

The brand relaunched with Sephora and Sephora inside J.C. Penney in 2013, but really made its way back to the beauty map in 2015 when it launched Custom Cover Drops.

It gave us some credibility in being innovative and thinking about complexion in a fresh way,” Collier said. Today, customization products make up roughly a third of Cover FX’s business — the brand also sells Custom Enhancer Drops, Custom Infusion Drops and Glitter Drops. Another third of the business comes from the brand’s foundation and concealer products, and the final third comes from CoverFX’s recently restaged Perfect Setting Powder and makeup-setting mists. 

In addition to launching new products, CoverFX has also added new distribution. The brand launched with Ulta Beauty in 2017 in 250 doors, and is planning to open 100 more Ulta doors this spring, according to Collier. The business also opened with Sephora Middle East in about 40 doors, and launched with Sephora in Southeast Asia and Australia. While Cover FX’s e-commerce operations are growing, they still make up a very small percentage of overall sales, according to Collier.

Looking forward, the plan includes same-store sales growth, a move further into color (Cover FX sells six shades of an eye shimmer called Shimmer Veil, but doesn’t make an assortment of non-complexion makeup) and opening more international markets, Collier said.

“We’ve had a lot of requests from our cast members and from our consumer to expand into color,” Collier said. “This is an opportunity with a lot of new product development in the color category, as well as in our prep primers and our booster drops. Our customer is very concerned about what she’s putting on her skin, so I think we have credibility in skin care as well as in color.”