The Honest Company reported a revenue growth of 21% in the first quarter for 2023.

 

The results reflect the three months ended March 31, 2023.

 

“The strength of the Honest Brand is reflected in our first quarter revenue growth of 21% and tracked channel consumption growth of 30%,” said CEO Carla Vernón. “With well-balanced growth across digital and retail channels, both up over 20% in the quarter, we remain confident about our omnichannel approach of making Honest products available when and where they are most convenient for consumers.”

 

Revenue increased 21% to $83 million driven by strong retail consumption, growth in the digital channel, distribution gains achieved in 2022, new revenue from baby clothing and the benefit of price increases, the company said.

 

Revenue from skin and personal care (27% of total first quarter 2023 revenue) increased 7% due to retail consumption gains, a more focused assortment on best-selling “hero” items, and innovation, including Daily Green Juice Antioxidant Super Serum, which launched in the first quarter of 2023.

 

Revenue from household and wellness (9% of total first quarter 2023 revenue) increased 81% driven by the integration of baby clothing in the third quarter of 2022.

 

Executives noted that its Transformation Initiative, starTED IN in the first quarter, Is designed to improve our cost structure and enable growth. Officials said they expect the initiative  “to drive profitability and sustained shareholder value by focusing on three primary pillars—brand maximization, margin enhancement and operating discipline.”

 

According to Honest, brand maximization refers to aligning its pricing to reflect the premium nature of the brand, leveraging the Honest brand to drive growth through innovation, and improve marketing effectiveness; margin enhancement, to expanding gross margins by exiting Europe and Asia, discontinuing low-margin product lines and SKUs and expanding the role of margin-accretive products, and drive cost savings activities; and operating discipline, building a culture of executional excellence, taking a focused approach to trade and promotion activities, and managing working capital through inventory reduction.

 

In the first quarter of 2023, the company recognized $7 million of costs related to the Transformation Initiative. For the full year 2023, costs related to the Transformation Initiative are expected to be in the range of $10 million to $15 million, of which $6 million to $8 million is expected to be non-cash.

 

The Honest Company's Transformation Initiative is expected to result in annualized benefits in the range of $15 million to $20 million, and the company expects to begin seeing benefits in late 2023.