Shares of Playa Vista-based consumer products manufacturer The Honest Co. Inc. were boosted by a recent positive earnings report.
The company, which makes a diverse line of products for women, babies and families, saw its share price increase by nearly 25% from a closing price of $3.15 on March 6 – the day it reported its fourth-quarter and full-year earnings after the market closed – to a close of $3.93 on the following day.
On March 11, shares in the company closed at $4.67, their highest level of the past 52-week period. Shares closed at $4.15 on Thurday.
The company reported on March 6 net income of $1.1 million (1 cent a share) for the quarter ending Dec. 31.
That was compared with a net loss of $12.6 million (14 cents) in the same period of the previous year.
The company’s revenue increased by 10% from the fourth quarter of the prior year to $90.3 million.
Analysts who follow the company expected on average a net loss of 8 cents, according to LSEG, a provider of financial markets data.
Carla Vernón, the chief executive of Honest, said during a March 6 conference call with analysts that the company had strong results in the fourth quarter.
She added that she was proud of her team’s performance, as the just-completed year was one of tremendous change, she said.
“We were a company in need of a transformation and our teams quickly went into action to define our transformation initiative and a new operating mindset,” Vernón added. “As a result of these efforts, we strengthened our business performance, our team culture and our financial results.”
David Loretta, Honest’s chief financial officer, said that he marked last year as a significant turnaround period for the company.
“And we expect the improving financial trends to continue in 2024 and beyond,” Loretta said during the conference call.
During the fourth quarter, The Honest Co. delivered a record-high revenue of $90 million. This was driven by strong results in the digital sales channel, including robust consumption at Amazon.com Inc., Loretta added.
“Our Amazon business has benefited from high-return marketing and improved supply chain planning,” he said.
Vernón said that she believes Honest is a consumer products company made for current times.
“Now that we have an improved financial foundation, we are in a great position to further unleash the distinctive elements,” she said during the conference call.
Company focuses on clean ingredients
The company was born out of a desire to bring a higher standard for clean ingredients and sustainable design to baby and personal care products, Vernón said.
Actress Jessica Alba was one of the founders of Honest and serves as chief creative officer. She represents the company through personal appearances.
“And to this day, we hold every product we sell to the Honest standard,” Vernón continued. “This standard is a set of guiding principles that puts our mission into action… At Honest, our standard always begins with clean ingredients.”
The company said it has eliminated 3,500 chemicals and materials from it products, she said.
“Our own Honest standard is a (stricter) benchmark than the restrictions dictated by either EU or U.S. regulations,” Vernón said.
But the company’s success goes beyond its approach to ingredients as it reshapes product categories in other ways.
“For example, we revolutionized baby care with our approach to seasonal fashion-inspired diaper prints, matching baby apparel, baby gifting and inspiring wellness rituals that take baby bath time to a whole new level,” she added.
