06.07.23
As part of its transformation initiative to drive profit and value, the Honest Company has announced it will exit the European and Asian markets to allow it to better focus on how to drive growth in North America. The company will also move away from certain low margin products in an action that will primarily impact portions of the household market.
These actions come as the Honest Company reports significant growth in its core markets including baby diapers and wipes, where it continues to outpace category growth, CEO Carla Vernón reports. In the first quarter of 2023, the company achieved a 21% rise in revenue, thanks largely to healthy consumption of its key markets, price inflation and expanded distribution in retail and online channels. Its diaper and wipes business represent 65% of its overall sales and reported 23% increases, significantly outpacing overall market growth in both categories.
Honest’s decision to focus on North America is part of its three-part transformation initiative, launched last year, which focuses on brand maximization, margin enhancement and operating discipline. The company also plans to take significant pricing actions across its product categories in coming months to better align with its premium status.
“The Honest brand has typically had the typical 15% price premium to our key branded playersthat are often the share leaders in the category.” Vernón says. “That pricing relationship is one that is true for us across many of our categories and our retail partners know that and they understand it is related to the quality of our proudcts.”
The pricing increases have already begun to roll out and will continue to impact the company’s pricing across most of its key cateogries throughout 2023.
“We have a lot of reason to believe, in addition to 30% consumption growth, that our brand is strong with the consumer that we serve," Vernón adds. "It is important that we have a pricing structure that matches the branded premium and allows us to continue to deliver that shareholder value and invest in the brand and invest in the differentiated benefits that we deliver. We have every single to believe that this is going to be accepted in the market."
These actions come as the Honest Company reports significant growth in its core markets including baby diapers and wipes, where it continues to outpace category growth, CEO Carla Vernón reports. In the first quarter of 2023, the company achieved a 21% rise in revenue, thanks largely to healthy consumption of its key markets, price inflation and expanded distribution in retail and online channels. Its diaper and wipes business represent 65% of its overall sales and reported 23% increases, significantly outpacing overall market growth in both categories.
Honest’s decision to focus on North America is part of its three-part transformation initiative, launched last year, which focuses on brand maximization, margin enhancement and operating discipline. The company also plans to take significant pricing actions across its product categories in coming months to better align with its premium status.
“The Honest brand has typically had the typical 15% price premium to our key branded playersthat are often the share leaders in the category.” Vernón says. “That pricing relationship is one that is true for us across many of our categories and our retail partners know that and they understand it is related to the quality of our proudcts.”
The pricing increases have already begun to roll out and will continue to impact the company’s pricing across most of its key cateogries throughout 2023.
“We have a lot of reason to believe, in addition to 30% consumption growth, that our brand is strong with the consumer that we serve," Vernón adds. "It is important that we have a pricing structure that matches the branded premium and allows us to continue to deliver that shareholder value and invest in the brand and invest in the differentiated benefits that we deliver. We have every single to believe that this is going to be accepted in the market."
