Olaplex Holdings Inc. said its sales will fall below analyst estimates this year as the company seeks to reverse a slowdown in demand and pushes back against consumer complaints.
(Bloomberg) — Olaplex Holdings Inc. said its sales will fall below analyst estimates this year as the company seeks to reverse a slowdown in demand and pushes back against consumer complaints.
The hair-care products company expects net revenue to be between $563 million and $634 million, a 15% decrease from 2022 at the midpoint, according to a statement Tuesday. Analysts were calling for $731 million.
The shares sank as much as 20% in Tuesday trading in New York before paring part of the decline.
Olaplex warned late last year about slowing sales growth as competition with other brands heated up and inflation pressured consumers. The firm, known for its “bond-building” line that seeks to repair damaged hair, responded by bolstering marketing in a bid to spur demand. Olaplex is also fighting back against a lawsuit alleging the company’s products cause hair loss and other issues.
“Our priorities in 2023 are to reset our base and invest in our core to provide a more powerful platform for growth,” Chief Executive Officer JuE Wong said in a statement.
The company also said it expected 2023 adjusted net income between $176 million and $224 million, which is lower than the $273 million average analyst estimate.
In a call with analysts, Wong said this year the company will ramp up marketing spending and the number of samples it gives away, while also becoming more proactive about countering “potential misinformation” about the brand.
“We are disappointed with this outlook and hold ourselves accountable for getting to this position and for improving the business,” she said.
For the quarter ended Dec. 31, Olaplex said sales were $130.7 million, which trailed the $133 million analysts were expecting. Adjusted earnings of 7 cents a share beat estimates. In October, Olaplex sharply pulled back its outlook for the rest of 2022 given slower sales.
Olaplex shares have declined 77% since the company’s initial-public offering in September 2021.
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