Olaplex reports decline in Q3 2024 sales, lowers full-year forecast
Olaplex announced its financial results for the third quarter of 2024, showing a 3.6% drop in net sales compared to last year. The hair care brand, known for its bond-repair products, also lowered its sales forecast for the rest of the year due to challenges in its international markets and slower returns on new marketing investments than expected.
For Q3 2024, Olaplex’s net sales were US$119.1 million, down from US$123.6 million in Q3 2023. The Professional channel, a crucial part of its business, saw a decline of 12.6%, bringing in US$42.2 million.
On the other hand, direct-to-consumer sales increased by 6.8% to US$34.3 million. Specialty retail sales slightly decreased by 1.3% to US$42.6 million. US sales fell by 3.3% and international sales by 3.9%.
The company has now adjusted its full-year revenue forecast to between US$405 million and US$415 million, down from its previous forecast of US$435 million to US$463 million.
International market challenges
CEO Amanda Baldwin emphasizes that Olaplex is focusing on a transformation plan, but progress in some areas has been slower than expected. “We’re making strides in our transformation, but we’ve had to adjust our strategy, especially in international markets,” says Baldwin.
The company is working to simplify global distribution and update marketing efforts abroad to strengthen its presence, but these changes are expected to impact only short-term sales.
Olaplex’s Professional channel faces challenges as salon-based services continue to recover slowly. The direct-to-consumer segment, however, shows promise, as it benefits from a shift toward online shopping.
The company says it is not yet picking the fruit from its recent marketing and sales investments in the US market.
Mixed results reflected
Olaplex’s gross profit margin slightly improved to 68.6%, up from 67.6% last year, thanks to “cost-efficient” manufacturing shifts. Net income fell by 27.3% to US$14.8 million, while adjusted net income dropped by 13.8%. Diluted earnings per share were US$0.02, down from US$0.03 in 2023.
The company’s operating costs have increased, with selling, general and administrative SG&A expenses up nearly 18%. Olaplex attributes the rise mainly to higher marketing expenses to improve the brand’s awareness. However, the company says it has not yet reaped the benefits of these expenses and might ultimately reconsider the strategy.
Cautious outlook
Looking ahead, Olaplex revised its expectations for the rest of the year, expecting full-year net sales to be between US$405 million and US$415 million, lower than the original prediction.
The company cited three main reasons for this adjustment: ongoing issues in international markets, limited results from recent US marketing campaigns and plans for more aggressive promotions during the holiday season.
These factors are expected to impact profit margins, which are now forecasted to be between 70.9% and 71.6%, down from previous estimates.
The hair care brand previously launched patented Bond Shaping Technology for curly hair for its Bond Shaper products.
