Olaplex’s sales decline isn’t over yet.
In its first-quarter results released on May 2, the company reported a 13.1 percent net sales decrease to $98.9 million. It cited its efforts to cut back on distributors where the company said it found evidence of diverted product.
CEO Amanda Baldwin said on the company’s earnings call that it is “well positioned to achieve steady progress toward our goals for 2024,” noting that it upholds its 2024 guidance of $435 to $463 million in sales for 2024. Down over 90 percent from its 2021 IPO, its share price saw an uptick to $1.66 following the earnings call.
Adjusted EBITDA was $35.5 million, compared to $50 million in the same quarter last year. Gross profit margin was 72.1 percent, up from 71 percent in the same quarter last year.
While U.S. sales increased 2.5 percent year-over-year, the decline came from a 24.3 percent plunge in international sales.
According to its earnings call, this quarter’s performance was due in large part to its culling of distributors in the professional channel it believes are the source of diverted items in Europe. Baldwin said that the brand is “limiting new distribution,” and this strategy produced a “negative short-term impact” but hopes it will ultimately spur a turnaround.
As a result, the professional channel saw the largest dip in sales with a 19.9 percent decrease to $38.7 million. DTC sales declined by 15.7 percent to $25.7 million, which the company said was due to the timing and phasing of shipments. Specialty retail declined by 1.2 percent to $34.4 million.
Beyond distribution, other issues the brand has faced since its IPO have included a growing number of competitors like K18 and Epres, as well as negative TikTok sentiment related to a hair loss lawsuit that was dismissed in 2023.
Answering a question on the earnings call, Baldwin said that negative claims about the brand on social media last year were not a major factor in the ongoing decrease, saying they impacted the business “at a moment in time” but were “not the core issue at this juncture.”
Learn more:
Olaplex Embarks on Turnaround Plan After Rough 2023
Reporting a double-digit sales decline in its fourth-quarter earnings, Olaplex’s new CEO outlined the company’s comeback strategy.
