Consumer packed goods (CPG) company, Honest Co., has filed for an initial public offering. The company, which was founded by actress Jessica Alba in 2012, specializes in offering safe and effective baby, beauty and household solutions.
According to the S-1 filing, Honest Co. saw its revenue jump just roughly 28 percent to $300 million in the year 2020, with diapers and wipes driving 63 percent of its sales. Furthermore, its skin and personal care category jumped 36 percent.
But while the company saw revenue growth last year, the CPG company still reported a net loss of $14.5 million in 2020. Ultimately, the company has never been profitable on an annual basis since 2012.
“We have incurred net losses each year since our inception and we may not be able to achieve or maintain profitability in the future,” the company said in the risk factors section of its S-1 filing.
The company’s 2020 growth, like many brands that excelled in 2020, was largely driven by digital sales as many consumers shifted toward online purchases during the pandemic. Digital sales represented 55 percent of the company’s revenue last year.
The company’s products can be found online and in-store at over 32,000 retail locations, including Walgreens, Amazon and Nordstrom and Boots located in the U.K.
“We see consumers increasingly self-educating on the benefits of clean and natural products through social media, influencers and other online content, driving digital engagement and purchasing that supports continued outsized growth of the ecommerce channel,” the company said.
Alba started Honest Co. in 2012 to offer clean and safe alternatives that exclude harmful chemicals and materials like parabens and sulfates. Over the years, it has marketed and profited by selling its “better-for-you” products, leading the company to be valued at $1.7 billion, according to 2016 PitchBook data.
In 2017, however, Honest Co. settled on a lawsuit that claimed the brand fraudulently labeled some of its products as “natural,” “plant-based,” or “no harsh chemicals (ever!)” when they actually contained “a spectacular array of synthetic and toxic ingredients.” The negative attention ultimately led the company’s valuation to drop and resulted in stagnated growth.
“Health and safety incidents or advertising inaccuracies or product mislabeling may have an adverse effect on our business by exposing us to lawsuits, product recalls or regulatory enforcement actions,” the company said.
Since then, the company has made moves to remedy its image. One of those moves included the appointment of Nick Vlahos, former COO at The Clorox Company and VP and general manager of Burt’s Bees, as CEO in early 2017. Since his appointment, Vlahos has worked to improve the company’s overall branding and business strategies. Vlahos has been credited for scaling the company’s business beyond its direct-to-consumer (DTC) model by creating and offering up more of an omnichannel experience.
According to Pitchbook, Vlahos’s efforts have seemingly paid off as the company has been able to raise $497 million in funding.
Looking ahead, Honest Co. plans to increase its overall customer engagement and awareness, improve existing products, launch new categories and expand international distribution.
Honest Co. has listed a placeholder IPO value of $100 million and it plans to trade on Nasdaq under the symbol “HNST.”