The Santa Barbara, California-based company saw net sales increase 38.6 percent to $210.9 million in the second quarter, rising 41.3 percent in the U.S. and 35.2 percent internationally. This was almost $10 million more than analysts had been expecting.
Professional made up $105.5 million of sales, while specialty retail and direct-to-consumer came in at $64.2 million and $41.2 million, respectively.
Net income, meanwhile, increased 77.7 percent and adjusted net income rose 35.5 percent. Diluted earnings per share were 13 cents for the second quarter of 2022, as compared to 8 cents for the second quarter of 2021. Adjusted diluted EPS were 14 cents for second-quarter 2022, as compared to 11 cents for second-quarter 2021, narrowly beating Wall Street estimates.
JuE Wong, Olaplex’s president and chief executive officer, hailed the quarter as “excellent” in a statement accompanying the results.
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“Building on the strong momentum from the first half of the year, we are reaffirming our fiscal-year 2022 guidance ranges,” she said. “This reflects the successful execution of our strategy as we disrupt the prestige hair care market with science-based, patent-protected products that are designed to fix real hair problems from first use.”
Nevertheless, shares closed down 9.9 percent to $14.68, after initially rising at the beginning of the day. While it may just be down to general market jitters over the economy, there was some speculation that part of it was down to Olaplex maintaining its guidance of net sales of between $796 million and $826 million, a smidge below Wall Street forecasts of $825.7 million.
“We maintained our guidance, which we feel is very strong,” Wong said during an interview with WWD. “If you think about it, we are maintaining to a mid-point of plus 36 percent of the top line. I’m very sure any company today — if they can go and say they can maintain guidance of plus-36 percent at the mid-point — it’s really showing confidence.”
As for economic headwinds, she added that while the category isn’t immune to the marcroeconomic situation, what is comforting is that while there has been trade down during past downturns, generally no one leaves beauty.
“You still have to wash your face, you still have to wash your hair, you still have to shower and I think for Olaplex what is so fundamentally important is that we are the only technology-driven brand that addresses rebuilding and repairing your hair bonds,” she said. “We are an entry-level prestige price point, which means that we can actually take market share during a downturn from higher price points.”