Dive Brief:
- Grove Collaborative reported Tuesday that its fourth-quarter revenue fell 17.3% year over year to $49.5 million. From the previous quarter, revenue was up 2.5%, marking the company’s first sequential quarterly revenue increase in three years, according to CEO Jeff Yurcisin.
- Losses grew during the quarter, with operating loss up about 5% year over year to $8.3 million and net loss up more than 30% to $12.6 million.
- For the full year, revenue was $203.4 million, a 21.5% decline from the prior year, which Grove attributed to fewer DTC orders. Both operating and net losses narrowed in 2024, reaching $22.5 million and $27.4 million, respectively.
Dive Insight:
Grove Collaborative’s leaders this week said the company is in the final stages of a multiyear turnaround, which includes a pivot away from wholesale partners like Target and a focus on acquiring third-party brands.
Building out its portfolio of brands further, Grove on Tuesday announced the acquisition of health and wellness company 8Greens, per the company. Financial terms of the deal were not disclosed.
“As a retailer, we at Grove are dedicated to being the destination for conscientious consumers who want the best for themselves, their families, and the planet,” Yurcisin said in a statement. “This acquisition expands our owned brand product offering and helps us better educate the Grove customer to serve their needs.”
Dawn Russell, who founded 8Greens alongside James Russell, will join Grove as a consultant. 8Greens’ products will be sold online through Grove’s marketplace starting in April and on existing platforms, including the brand’s website, Amazon and QVC.
The 8Greens deal comes on the heels of Grove announcing the acquisition of Grab Green, which offers sustainable, non-toxic cleaning products. Since the fourth quarter of 2023, Grove has increased the number of third-party brands sold on its e-commerce platform by 30%.
“Both Grab Green and 8Greens align with our values and commitment to sustainability, innovation and personal health and we're excited to integrate these brands into the Grove family,” Yurcisin said during a Tuesday earnings call, according to a transcript. “We believe acquisitions can enhance our competitive positioning and drive long-term value creation for our shareholders.”
Over the last year, Grove has initiated several cost-cutting, organizational and growth initiatives to boost profitability. One aspect of that turnaround includes a refocus on its DTC operations. The company in November said it plans to end its brick-and-mortar retail partnerships, which in addition to Target include Walmart, Kohl’s, Costco and CVS. The winddown of Grove’s physical in-store presence should be finished by the first half of this year.
While the decision to pivot away from wholesale partners will initially apply revenue pressure, Yurcisin said it will ultimately strengthen profitability by allowing the focus to shift exclusively to DTC. In the fourth quarter, DTC total orders were down 17% year over year to 717,000, while DTC active customers fell 25% to 688,000.
In September Grove secured a $15 million investment to help it pay off debt, and on Tuesday Yurcisin said the company paid off $72 million in term debt in the fourth quarter. Grove has also seen leadership changes recently, with Chief Financial Officer Sergio Cervantes and Chief Technology Officer and Grove co-founder Chris Clark exiting the company. Tom Siragusa has taken over the CFO role on an interim basis; the company doesn’t plan to fill the CTO role, citing the recent switch to Shopify, which reduces the level of required in-house technical oversight.
Looking ahead, Grove anticipates Q1 will be the lowest revenue quarter for the year, partly due to a negative revenue impact driven by the Shopify transition. For the full year, revenue is expected to be flat to down mid-single-digits.
