Dive Brief:

• In an April 9 prospectus that emphasizes its reliance on just three retailers, The Honest Co. filed for an initial public offering with the Securities and Exchange Commission. Its placeholder IPO target is $100 million, according to the filing.

• Last year the consumer products company generated 45% of its revenue from retail partners (including their e-commerce), and about 55% of 2020 revenue came from digital channels, with a third coming from its own website. The company said Target accounts for about 23% of its revenue, Amazon about 22% and Costco about 8%, according to the filing.

• The Honest Company also said it has "incurred net losses each year since [its] inception and ... may not be able to achieve or maintain profitability in the future." But in 2020, the company’s revenue rose 27.6% year over year to $300.5 million, as operating loss narrowed by 57% to $13.5 million and net loss narrowed 53.5% to $14.5 million.

Dive Insight:

Several reports have circulated in years past that the consumer products brand, co-founded by actor Jessica Alba in 2012, was preparing to go public. The company may have deemed it wise to finally go through with it after a pretty good year.

With the pandemic spurring health and cleanliness concerns, sales of health, wellness and cleaning products soared last year, creating windfalls at mass merchants, grocery stores and specialty retailers like Bath & Body Works. At the Honest Co., diapers and wipes sales rose 16.4% to $188.5 million, skin and personal care products sales rose 35.5% to $79.5 million, and household and wellness sales rose 116.5% to $32.5 million, the company said in its IPO filing.

It's not all smooth sailing, though. The company also warned would-be investors that controversies about its ingredient labeling, product effectiveness and "natural" claims have previously invited complaints and litigation, and damaged its brand. In 2017, the company settled class action lawsuits "by agreeing to marketing or reformulating changes and a settlement fund of $1.6 million." The company is also updating some of its labels, and in 2017 and 2021 recalled some products due to potential contamination.

The Honest Co.'s reliance on just three retailers for a good portion of its revenue could also give some pause, especially since the two biggest contributors to its sales — Target and Amazon — are also potentially powerful competitors. Both retailers have developed formidable private labels, including in the categories that represent The Honest Co.'s strengths.

The company is also dependent on Alba as an influencer, although that will help with its ambitions overseas, the company said. Last year international markets delivered 2% of the company's revenue, "while a significant number of Jessica Alba’s social media followers were located outside the United States."

The company already sells in Canada and Europe by leveraging partnerships with established retailers. Growth plans include expanding there and to Asia, and working with both retailers and third-party e-commerce platforms, according to the filing.