Olaplex Holdings Inc. shares sank after the haircare company cut its full-year sales guidance amid weak demand and increased competition.
(Bloomberg) — Olaplex Holdings Inc. shares sank after the haircare company cut its full-year sales guidance amid weak demand and increased competition.
Olaplex now expects fiscal 2023 sales in a range of $445 million to $465 million, compared with prior guidance of $563 million to $634 million. The shares fell as much as 25% in Tuesday trading in New York, the most intraday since October of last year.
Olaplex is facing challenges “as competitive products continue to enter the hair care category,” Raymond James analyst Olivia Tong wrote in a note. “Management acknowledges marketing initiatives were not effective enough to stabilize sales losses.”
Sales for the quarter ended June 30 dropped by nearly half, with the professional channel down 61% and specialty retail down 54% compared to the same period last year. That was worsened by the comparison to a product launch in the second quarter of 2022 and price increases that took effect July 1, 2022.
“Retail channels experienced slower demand and some customers rightsized their inventory positions in response to current trends,” Jue Wong, chief executive officer of Olaplex, said in a statement Tuesday. The company plans to increase marketing investment and focus on stabilizing demand in the second half of the year, she said.
The haircare company is battling a lawsuit filed earlier this year alleging that Olaplex products caused hair loss and other problems.
(Updates shares, adds analyst commentary in fourth paragraph.)
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