Olaplex’s woes have continued into the third quarter.
The hair care brand, once the category’s darling, culminating in a 2021 IPO, has seen sales continue to slide.
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Net sales for the quarter ended Sept. 30 fell 30 percent year-over-year to $123.6 million. Specialty retail, previously the brand’s largest channel, saw sales fall 41.8 percent from the prior year, to $43.2 million. Professional and direct-to-consumer channels were $48.3 million and a $32.1 million in the quarter, respectively.
Net income fell 66.5 percent to $20.4 million, and adjusted net income dipped 54.5 percent to $33.4 million, for the quarter.
The company has narrowed its guidance, expecting $450 million to $460 million in net sales for the full year. Olaplex had previously projected $445 million to $465 million, which was roughly $144 million below its initial targets for the year.
Diluted EPS was 5 cents for the quarter. The stock closed up 25 percent at $1.73 per share.
“Our third-quarter results and the encouraging early indicators from our increased investments support our belief that we are making solid progress toward stabilizing our sales trend in the second half of 2023. We remain excited about the untapped opportunities ahead of Olaplex and are implementing changes that we believe will position the brand for long-term profitable growth,” said J. P. Bilbrey, interim chief executive officer, in a statement.
Bilbrey stepped into the top slot after previous CEO JuE Wong departed the company in October. In 2024, Amanda Baldwin, most recently CEO of Supergoop, will take the top slot.
On a call with analysts, Eric Tiziani, chief financial officer, was optimistic about the brand’s turnaround progress. “We communicated that stabilizing our sales trends in 2023 was a top goal. We believe we delivered solid progress against that goal. Our demand trends are stabilizing,” he said. “Our increased investment in the business is yielding positive results.”
He pointed to a doubling down on education and the brand’s professional backing, in addition to a full-funnel marketing approach, as signs of life.
Ashley Helgans, a Jeffries analyst, also saw signs of life. In a note, she said the brand exceeded net sales expectations, and is optimistic about Baldwin’s appointment.
“The appointment of Amanda Baldwin as CEO should be positive for the stock, as many investors believe a management change is necessary for a brand turnaround,” the note read. “Baldwin’s background with the skin care category is attractive, as that has long been an adjacent category Olaplex has expressed interest in entering.”
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