Shares of The Honest Company, Inc. plunged on Thursday’s extended trading after posting downbeat quarterly results due to the steep drop in cleaning sales.
The clean beauty and diaper company significantly slashed 20.36% or 1.23 points to $4.81 per share.
It reversed its gain of 1.34% or 0.08 points to $6.04 per share during the regular hours market. This upward movement sent an additional $111.96 million to the company’s valuation.
Accordingly, Honest Co. reported that it lost $9.00 million, or $0.10 per share, in the fourth quarter. This figure went above the analyst expectation of $0.07 per share.
Meanwhile, it is narrower than a loss of $12.70 million, or $0.37 per share, in the year-ago quarter.
Its revenue slightly increased 3.20% year-over-year to $80.40 million. This figure is due to the substantial volume growth in Honest’s main products, including baby wipes and diapers.
However, the number skidded from the average market consensus of $84.70 million.
Then, its household and wellness business dropped 68.00% in the quarter. Consequently, the reduced Covid-19-related consumer demand sharply hit the segment.
The company reported lower sales for sanitizing and disinfecting products and face masks. Then, Honest Co. CEO Nick Vlahos said that the firm did not expect this huge drop.
It recorded a $3.20 million write-down because of the household products, contributing to the earnings shortfall.
The business introduced hand sanitizers and cleaners in the second half of 2020 as the pandemic ground on.
In May of last year, its stock went public at $16.00 per share. The company makes natural consumer products that are not potentially harmful to health and the environment.
Honest Co forecasts a tough 2022
For the current quarter, Honest Co. anticipated a loss of $10.00 million before interest, taxes, depreciation, and amortization.
This projection came in higher than the $1.34 million profit seen by analysts. Eventually, it estimated the revenue to decrease by 15.00%.
For the full year, the firm expected a loss of $5.00 million to $10.00 million on that same basis. It missed the Wall Street consensus of $5.68 million.
Amid the easing of pandemic restrictions, Honest Co. plans to offer its goods at brick-and-mortar stores like Walmart.
Moreover, the benefits from product launches and increased distribution will start to show mostly in 2023.
Before the extended trading, Honest Co. traded 26.70% or 2.20 points lower since the start of the year.