Dive Brief:
- Jessica Alba, who founded The Honest Company over a decade ago, has decided to step down from her position as chief creative officer to pursue new endeavors, the company said in a Tuesday announcement. Alba will remain a member of the board of directors.
- The company last month reported Q4 revenue rose 10% to $90 million driven by growth in digital, volume and price increases. For the full year, revenue rose 10% to $344 million, beating the company’s expectations. Honest posted a lower year-over-year net loss of $39 million versus a $49 million net loss the prior year.
- For the year ahead, Honest is forecasting net revenue growth ranging from the low- to mid-single-digit range; the company expects a softer first half of 2024 compared to the second half. The company is continuing its work to manage working capital and operating expenses.
Dive Insight:
Chief Financial Officer Dave Loretta on a call with analysts in March described last year as “a significant turnaround period for the company,” with continued improvement in financial trends expected to continue this year. As Alba moves on, Honest has an updated long-term growth vision and performance is trending positive.
“Honest has been a true labor of love for me – one that showed me what’s possible when you infuse purpose into business,” Alba said in Honest’s announcement. “While there never would have been an easy time to make this decision, I know we have a leadership team in place to advance my founding vision and protect Honest’s reputation as an industry changemaker.”
The actress and entrepreneur also talked about her decision on Instagram. She shared several photos, including of her ringing the Nasdaq bell, and described her experience of founding and leading the company as “the ride of a lifetime.”
“As we reimagined the future of the business, we benefited greatly by having insights from our founder Jessica Alba,” CEO Carla Vernón said in a statement. “A true visionary, Jessica founded Honest with a desire to bring a higher standard for clean ingredients and sustainable design to baby and personal care products. I offer our deep appreciation on behalf of the management team, our board of directors and generations of Honest employees for Jessica’s leadership through the years.”
The company was in a less desirable position about a year ago. Back then, its Q4 net loss had risen 40% year over year, while its gross margin fell to 27.5% due to higher product and fulfillment costs. Honest implemented price hikes in all product categories during the second half of 2023. That strategy worked, Vernón said on the company’s latest earnings call.
“What we feel really good about is that we're growing on both dollars and units for overall which, as you've been watching what's happening in the consumer products space, that is such a great indicator for us that our consumer really values not only the distinctiveness of the brand but that when they're making these choices about which brands best serve their needs, even as we have delivered price advances over the last year, year and a half, our consumers are actually still growing with us,” Vernon said, according to a call transcript.
Honest’s household and personal care products began selling in Target in 2014, on Amazon in 2017 and at Walmart in 2022. Honest went public in 2021 with a target price of $100 million.
