The Honest Co. Files for an Initial Public Offering
Revenue grew by 12% between 2018 and 2020
Honest sells diapers, moisturizer, shampoo and other products.
Charles Sternberg, Assistant Editor04.12.21
The Honest Co., the consumer-products company founded by actress Jessica Alba, has filed for an initial public offering. The Los Angeles-based company filed to sell $100 million worth of shares, although observers note the figure is often used as a placeholder to calculate filing fees.
Launched in 2012, Honest sells diapers, moisturizer, shampoo and other products online and at thousands of retail locations. In its prospectus, Honest said its sales grew 27.6% to $300.5 million in 2020, from $235.6 million in 2019. It lost $14.5 million in 2020, or 85 cents a share, compared with a loss of $1.83 a share in the previous year.
The company has never been profitable. In fact, in its prospectus, the company admitted, "...we may not be able to achieve or maintain profitability in the future."
Last year, while all product categories grew from 2019 to 2020, The Honest Co.'s household and wellness revenue increased by 116.5% to $32.5 million. The company credits the gain to sales from the sanitization and disinfecting products that we introduced in 2020, in particular through the retail channel.
Overall, diapers and wipes accounted for 63% of the company's total 2020 revenue. Last year's revenue growth was driven in part by a bump in digital sales, which represented 55% of its revenue. Digitally-native brands like Honest, which sells products on Honest.com and digital retailers like Amazon, benefited from an overall shift to ecommerce last year as brick-and-mortar stores shut down during the coronavirus pandemic. US e-commerce sales jumped 32.4% in 2020 to $791.7 billion, according to the US Census Bureau.
"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 wrote in its prospectus.
The Honest Company's biggest shareholders include L Catterton, IVP, Lightspeed Venture Partners, Fidelity, and General Catalyst.
On May 5, The Honest Company announced the pricing of its initial public offering of an aggregate of 25,807,000 shares of common stock at a price to the public of $16.00 per share. The company is offering 6,451,613 shares of common stock and the selling stockholders named in the prospectus are offering 19,355,387 shares of common stock. In addition, the selling stockholders have granted the underwriters a 30-day option to purchase up to an additional 3,871,050 shares of common stock. The Honest Company will not receive any proceeds from the sale of shares by the selling stockholders.
The shares are expected to begin trading on the Nasdaq Global Select Market on May 5, 2021 under the ticker symbol “HNST” and the offering is expected to close on May 7, 2021, subject to customary closing conditions.
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Rapid urbanization, rising disposable income and social media exposure are driving growth, says GlobalData.
Cites health and safety concerns.