Shares in Olaplex took a beating on Tuesday, experiencing an 18% decline in premarket trading. The Santa Barbara-based beauty company cited lower profit and revenue in its second quarter due to weakened demand.
Sales Decline Hits Hard
Olaplex reported a substantial 48% decrease in net sales, amounting to $109.2 million. Analysts had predicted a decline, but not to this extent, with estimates placing the figure at $129.9 million according to FactSet. The company's US net sales plummeted by 59%, while international sales suffered a loss of 34%.
Impact on Professional and Specialty Retail Channels
Olaplex saw significant drops in sales across its professional and specialty retail channels. Sales in the professional sector saw a decline of 61% to $40.9 million, while specialty retail experienced a 54% drop, amounting to $29.8 million. The reduced demand for Olaplex products was further exacerbated by inventory rebalancing by its customers.
Profit Takes a Hit
The decline in sales resulted in a sharp decline in Olaplex's net income. Net income fell from $87.7 million to $6.2 million, translating to a per-share fall from 13 cents to just 1 cent compared to the previous year. Adjusted earnings per share landed at 3 cents, falling short of analyst predictions of 5 cents per share.
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