Olaplex has suffered a share price drop of more than 45% following a revision of its 2022 fiscal guidance.
According to the hair bond-building trailblazer, its updated guidance reflects a slowdown in sales momentum, which it attributed to macroeconomic pressures, increased competitive activity (including discounting) and a moderation in new customer acquisition, as well as inventory rebalancing across certain customers.
The company currently expects net sales for fiscal 2022 to be between US$704m and $711m, 18% up on full year 2021.
In August, following a strong H1 2022 performance, Olaplex had raised its full year guidance, anticipating net sales to fall between $796m to $826m. This would have represented a 36% increase compared with the previous year.
Following the revision announcement, Olaplex Holdings Inc stock fell 45.05% on Wednesday morning in pre-market trading to 5.38.
JuE Wong, Olaplex’s President and CEO, commented: “We are disappointed to lower our fiscal 2022 guidance. As an agile business, we have already identified and put actions in place to accelerate demand.
“We remain focused on executing our long term growth strategy and are confident that our competitive advantages: our powerful brand, patent-protected science-based technology, proven innovation model, strong community of stylists and end-consumers, and synergistic omnichannel model, have us well positioned to navigate during this dynamic period and to be powerfully positioned in the future.
“Overall, we continue to expect fiscal 2022 to represent another significant year of strong growth, profitability and cash generation.”
Founded in 2014, the California-based brand was acquired by private equity company Advent in 2019, with industry veteran JuE Wong taking over the CEO role from founder Dean Christal.
In October 2021, Olaplex Holdings Inc completed an initial public offering of 73,700,000 shares of its common stock.
Olaplex is widely credited with creating the bond-building category in hair care, but has faced competition in the category, resulting in years of legal woes with French beauty giant L’Oréal.
In 2018, Olaplex defeated L'Oréal in the UK High Court for infringing the patent for its Bond Multiplier hair lightening product, while, in 2019, a US judge ordered L’Oréal to pay $50m in damages, plus $14m in legal fees and costs incurred by Olaplex, to its rival. However, in 2021, the United States Court of Appeals for the Federal Circuit vacated this final judgement.
Earlier this month, Eric Pressly, the inventor and scientist behind Olaplex, who worked with Christal to launch the brand, re-entered the hair market with new brand Epres.
Epres features a Professional Bond Repair product for salon professionals and Bond Repair Treatment Kit for users at home. The patent-pending formulas for each product contain just four ingredients.
Olaplex is set to release its full year earnings on 9 November 2022.