11.09.23
The Honest Company’s revenue in the third quarter of 2023 increased 2% to $86 million driven by strong retail consumption, growth in the Digital channel, strong baby clothing performance, and the benefit of price increases, offset by exiting low-margin items in the club channel.
Revenue from Diapers and Wipes decreased 5% due to a decline in Retail channel sales compared to expanded retail distribution in the year-ago period. While shipments declined in the third quarter, retail consumption increased 32% in the third quarter supported by new distribution.
Digital revenue increased 19%, supported by double-digit growth at its key digital customer.
Retail revenue decreased 9%, due to a combination of a shift in timing of shipments at a key retailer and also the lapping of initial distribution. Additionally, Honest reduced sales of low-margin items in the club channel. While retail shipments declined, the company experienced 27% growth in tracked channel consumption.
“Our Transformation Initiative, which we initiated at the beginning of the year, continues to drive strong performance. The three pillars of the initiative - Brand Maximization, Margin Enhancement and Operating Discipline - were evident in our third quarter results,” says chief executive officer Carla Vernón. “Revenue in the third quarter was an all-time record and we delivered our highest gross margin in the last two years, contributing to another quarter of positive operating cash flow. These results demonstrate the power of the Honest brand and our commitment to driving shareholder value.
“The rigor we’re applying across the business, reflected in well-executed pricing, cost savings initiatives, and disciplined portfolio management, provides us positive momentum as we finish the fiscal year. Most importantly, we look forward to sharing our long-term strategy update with you next spring.”
Revenue from Diapers and Wipes decreased 5% due to a decline in Retail channel sales compared to expanded retail distribution in the year-ago period. While shipments declined in the third quarter, retail consumption increased 32% in the third quarter supported by new distribution.
Digital revenue increased 19%, supported by double-digit growth at its key digital customer.
Retail revenue decreased 9%, due to a combination of a shift in timing of shipments at a key retailer and also the lapping of initial distribution. Additionally, Honest reduced sales of low-margin items in the club channel. While retail shipments declined, the company experienced 27% growth in tracked channel consumption.
“Our Transformation Initiative, which we initiated at the beginning of the year, continues to drive strong performance. The three pillars of the initiative - Brand Maximization, Margin Enhancement and Operating Discipline - were evident in our third quarter results,” says chief executive officer Carla Vernón. “Revenue in the third quarter was an all-time record and we delivered our highest gross margin in the last two years, contributing to another quarter of positive operating cash flow. These results demonstrate the power of the Honest brand and our commitment to driving shareholder value.
“The rigor we’re applying across the business, reflected in well-executed pricing, cost savings initiatives, and disciplined portfolio management, provides us positive momentum as we finish the fiscal year. Most importantly, we look forward to sharing our long-term strategy update with you next spring.”