Dive Brief:
- Sustainable consumer products brand Grove Collaborative reported its Q1 net revenue dropped 11% year over year to $90.5 million from $102 million, according to a press release.
- The company’s operating loss increased from $36 million to $47 million. Grove Collaborative laid off 17% of its workforce in Q1 to “reduce operating expenses and strengthen key areas across the business,” per the release.
- The earnings report follows news from December that the retailer would become a publicly-traded company through a SPAC merger with Virgin Group Acquisition Corp. II — a deal that has yet to be finalized.
Dive Insight:
Grove Collaborative's results shine a light on how detrimental just a few months can be to a company’s expectations.
The retailer has slashed its long-term growth ambitions by nearly half, expecting to make $330 to $360 million in revenue by the end of 2024 instead of the previously expected $600 million, citing a variety of macro trends including inflation and a return to pre-pandemic consumer behaviors. For the next two years, Grove Collaborative predicts its revenue to be between $300 million and $310 million each year. As such, Grove Collaborative is focused on minimizing operating expenses and expanding its retail footprint.
"We remain highly focused on maximizing the power of our direct-to-consumer business, accelerating our retail expansion, and increasing efficiency in our marketing and corporate structure. We are seeing great success as we enter new retail distribution and have taken steps to right-size the overall business, and we will continue to focus on reducing operating expenses in medium term," Chief Financial Officer Sergio Cervantes said in a statement.
The company's Chief Executive Officer Stuart Landesberg acknowledged customers’ return to physical shopping during Q1 and expressed satisfaction with the company's partnership with Target.
“While revenues were down year-over-year on a difficult comparison against our largest sales quarter on record in the first quarter of 2021, we are pleased to report strong retail sales as we deepened our relationship with Target and shipped into our second retail partner, a leading omnichannel retailer with over 1,100 stores,” Landesberg said in a statement.
Grove Collaborative isn’t alone though — Honest Co., the personal care and household goods brand, also experienced a hit in Q1. Honest Co. reported a 15% decrease in revenue year over year, with operating expenses up by $3 million. Revenue from household and wellness products decreased by 20%, driven by decreased demand for sanitation products.
Over the past several months, Grove Collaborative has announced several key leadership changes. In February, former Burt’s Bees executive John Replogle was appointed chairman of its board of directors. Then in April, soon after Drew Barrymore became an investor, Grove Collaborative hired former Unilever executive Cervantes as its CFO.
