On Thursday, Amanda Baldwin, Olaplex’s new CEO, shared a new vision and course correction strategy during the struggling hair company’s fourth quarter 2023 earnings call.
Baldwin, formerly CEO of Supergoop, stepped into the chief executive role in mid-December 2023 after Olaplex’s former CEO, JuE Wong, stepped down in Oct. 2023. This is the first time Baldwin has spoken publicly in an earnings call about the company’s status under her tenure and her approach and plans. Overall, net sales for the quarter decreased 14.5% to $111.7 million, with the professional channel decreasing 22.7% to $42.5 million, direct-to-consumer decreasing 2.8% to $42.0 million and specialty retail decreasing 16.3% to $27.3 million. Net sales were $458 million for fiscal year 2023, a decrease of about 35% compared to 2022.
“I believe the headwinds were the result of the business growing too quickly [and] suffering from execution errors and not appropriately investing in the resources needed to best support the professional stylist community, develop the right capabilities and brand marketing, and prepare for the reality that often happens to a category creator: increasing competition,” said Baldwin on the earnings call.
Baldwin said her three priorities are maximizing the impact of Olaplex’s sales, marketing and education investments to generate demand. Second, it will strengthen its capabilities and culture to support the future. And third, developing a long-term roadmap and future vision for the brand. To that end, Olaplex will increase in-salon support for professional distribution, attend more in-person trade shows and unveil new education tools to stylists. There are also plans to upgrade visual merchandising at specialty retailers, limiting new retail partnerships and hammering down on retailers with diverted products. Olaplex is distributed through Sephora, Ulta Beauty, Bluemercury and Amazon. Stylists remarked in a professional stylist survey from Piper Sandler published Dec. 2023 that retailers like Walmart and Walgreens, where Olaplex products are found despite no formal distribution partnership, impact the brand’s reputation and stoking customer desire to buy products at a more affordable price than is offered in salons.
Furthermore, Baldwin said she wants Olaplex to define its market opportunity, refine the brand identity focused on the professional stylist and capture demand and market share with product innovation and further pursue global expansion opportunities. Notably, Olaplex hired Nicole Handy as its new vp of innovation in late February. Baldwin remained mum when an analyst on the call asked about potential product assortment, pricing strategies and potential category enhancements and extensions.
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“The goal is to establish a long-range strategic plan and financial framework, and we look forward to sharing more at the appropriate time,” she said.
Sales have continued to fall, both showing that the prestige bond-building brand has yet to reach the bottom and that its efforts thus far have barely stunted the sales hemorrhaging. Most recently, in early February, Olaplex expanded its roster of brand ambassadors, bringing in four new names as the bond-building brand tries to course-correct its relationship with the professional stylist community. In Sept. 2023, the brand debuted created a cheeky social campaign called Oladupe that sought to “dupe the dupers” by reminding people that there can be no true dupe for Olaplex’s proprietary formulas and product innovation. The year prior, Olaplex joined the metaverse platform Decentraland to “represent, connect and expand our community,” former CEO Wong said to Glossy. The 2024 marketing budget will expand to $66-70 million, an increase from $60.5 million in 2023. Net sales expectations for fiscal year 2024 earnings are between $435-463 million, representing between a 5% sales decrease and a 1% increase in sales compared to 2023.
“Management introduced its initial FY24 outlook that disappointed with the high end of range coming in below Street’s forecasts ahead of this print,” wrote Andrea Teixeira, analyst at J.P. Morgan. “While we had already anticipated a previewed weak guidance, the magnitude was worse than anticipated. Even despite the fact that most investors were likely expecting an earnings reset as incoming CEO Amanda Baldwin execute[s] her vision.”
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On the call, Eric Tiziani, CFO of Olaplex, said that guidance is consistent with the objectives of stabilizing product demand, strengthening the brand long-term and returning to net sales growth. The guidance implies it will happen in “the balance of the year,” he said, related to new product launches at the end of the year, new brand initiatives and marketing campaigns and holiday sales uptick.
“I have an extraordinary amount of optimism for what this brand can be as well as a tremendous sense of urgency about getting better at what we do every day,” said Baldwin, “But it really is about taking a measured and methodical approach to get all the details right and that does take time. It’s important to acknowledge that we’re working as quickly as possible, but it takes a little time for all the initiatives to fully hit.”
