April 21, 2024
Olaplex Embarks on Turnaround Plan After Rough 2023

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After taking the helm as Olaplex’s new CEO in mid-December 2023, Amanda Baldwin shared her strategy to bring the company back to growth in its fourth-quarter earnings call on Feb. 29.

“We recognise the current challenges and are facing them head-on, making investments to deliver on our long-term goals, and the tough decisions that are necessary to set ourselves up for the future,” said Baldwin on the call.

The company reported that 2023 net sales declined by 34.9 percent to $458.3 million. Olaplex’s sales plunge was the most pronounced in the United States, where it saw a 47.8 percent drop for the year, while international sales were down 18.3 percent for the year.

Olaplex’s fourth-quarter results yielded a less precipitous drop, which Baldwin said was “another positive step towards stabilising our demand trend.” Net sales for the quarter decreased by 14.5 percent year-over-year for a total of $111.7 million, with a 27.9 percent decline in the United States and a 0.7 percent decrease internationally.

Acknowledging the company’s “challenging” 18 months, Baldwin shared her assessment of the causes of its slowdown.

“I believe the headwinds were the result of the business growing too quickly, suffering from execution errors, and not appropriately investing in the resources needed to best support the professional stylist community, develop the right capabilities and brand marketing, and prepare for the reality that often happens to a category creator: increasing competition,” she said.

In the earnings call, she stated that the brand’s comeback strategy would include more focus on the professional stylist channel, an investment in elevating brand equity and use of data to drive decisions.

As the company reported that the brand experienced a 40.1 percent sales decrease in the professional channel in 2023, Baldwin said it would improve engagement with stylists through more team salon visits, trade show presentations, account management and educational tools.

In addition to facing off against a growing number of competitors such as K18 in its signature bond-building category, the brand was hit by a lawsuit and viral TikTok videos alleging it caused hair loss, reporting a 15 percent decrease in DTC and 42.6 decline in specialty retail sales for 2023.

Baldwin said that the brand plans to ramp up its product development and marketing efforts to earn “true brand love” through a focus on data to calculate ROI in marketing as well as upgrading visual merchandising, sampling and enhancing paid media at the retailer partner level.

Distribution is also a part of Olaplex’s strategy to boost brand equity. As Olaplex products have been listed by third-party sellers on online platforms such as TikTok Shop, Baldwin said the brand planned to “combat the diversion of our products by closing some accounts where we find evidence that the distributors were the source of diverted product.”

When it comes to operations, the company is also in the process of “evolving our integrated business planning capabilities to improve forecasting and overall business performance management,” and will “bring our team together in person more frequently” to facilitate “strong corporate culture,” said Baldwin.

Learn more:

Olaplex’s Sales Continue to Plunge

The company’s specialty retail channel was hit the hardest, reporting a nearly 42 percent drop in sales compared to the same period last year.

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