Olaplex lowers outlook after Q4 sales drop

Olaplex Holdings Inc. is looking to "reset the business" after a drop in fourth quarter sales for the period ending 31 December 2022. 

For the fourth quarter, Olaplex shared the following results:

Net sales declined 21.5% to £109 million ($130.7 million), down 28% in the US and 13.4% internationally. By channel, sales dropped 3.9% in Professional, 45.3% in Speciality Retail and 13.2% in Direct-to-Consumer.

• Gross profit down 30.3% to £76 million ($92 million).
• Gross margin of 70.4% against 79.4% in 2021.
• Net income decreased 51.5%.

For the full year, Olaplex shared the following results:

Net sales grew 17.7% to £587 million ($704.3 million), up 15.4% in the US and 20.9% internationally. By channel, sales increased 16% in Professional, 33.9% in Speciality Retail and 3% in Direct-to-Consumer.

• Gross profit up 9.7% to £433.7 million ($519.5 million).
• Gross margin of 73.8% against 79.2 in 2021.
• Net income increased 10.5%.

Looking ahead, the company's 2023 guidance includes "management's expectations regarding current consumer demand, uncertainty related to the macroeconomic environment and trends improving sequentially throughout the year". For FY23, Olaplex expects net sales to decrease 15% to £470-529 million ($563-$634 million).

JuE Wong, President and CEO of Olaplex, said: "The fourth quarter represented a challenging end to FY22, reflecting the rapidly changing market dynamic that began mid-year.

"Our priorities in FY23 are to reset our base and invest in our core to provide a more powerful platform for growth. We are focused on increasing investments in sales, marketing and education, while continuing to bring to market efficacious products that professionals and consumers love and trust."

The trading update follows recent news that Olaplex is being sued by 28 women, all of whom claim its products caused hair loss, blisters and other conditions. However, the haircare brand has released test results that show the products are safe.