Dive Brief:
- Hair care brand Olaplex reported its first-quarter net sales declined 13.1% year over year to $98.9 million, according to a company press release. By channel, professional sales decreased by 19.9%; specialty retail fell 1.2%; and direct to consumer declined 15.7%.
- Net income decreased 63.1% year over year to $7.7 million, while operating income fell 44.8% to $19.6 million.
- The company reiterated its guidance for the fiscal year, with net sales expected between $435 million and $463 million.
Dive Insight:
Following what the company called a “reset” year, Olaplex reported declines across all channels.
“Our first quarter results represent progress on the business transformation plan that we outlined earlier this year,” Amanda Baldwin, CEO of Olaplex, said in a statement. “I am encouraged with our performance to date and believe we are well-positioned to achieve our goals for 2024.”
On the company’s earnings call Thursday Baldwin told investors the brand is on pace to meet its goals for 2024.
“We are taking actions that are designed to build and maintain the long-term health of the business even if they have a negative short-term impact,” Baldwin said. “As mentioned last quarter, we are limiting new distribution this year to allow for a greater focus on our existing customers and current channels, as well as rationalizing some accounts where we find evidence of the distributors with a source of diverted product.”
International sales declined 24.3% in the first quarter. The company felt the impact of distributor rationalization, which resulted in a short-term negative impact on its volume, particularly in Europe, CFO Eric Tiziani said on the call. However, net sales increased 2.5% in the United States.
Olaplex has made a number of executive changes as it navigates through various financial challenges. Baldwin, former CEO at Supergoop, took over the top spot at the start of the year after JuE Wong exited the company. Tiziani, whose last day with the company is Friday, is being replaced on an interim basis by Paul Kosturos while a search is conducted for a permanent CFO.
Founded in 2014 by Dean Christal, Olaplex was acquired in early 2020 by Advent International. The company went public in September 2021 and was initially valued at over $15 billion. However, at the time it carried with it a debt of $766.8 million, much of that following a $470 million dividend paid to an entity controlled by Advent Funds.
