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Honest Company (NASDAQ:HNST) stock sank 20% postmarket after the firm provided a disappointing outlook and reported Q4 results.
HNST expects 2022 revenue to be approx. flat vs. $318.6M in 2021. Consensus estimate is $366.81M.
Q1 revenue is expected to decline ~15% Y/Y to $68.88M vs. consensus estimate of $91.39M.
Q1 outlook reflects a comparison against elevated sales related to sanitizing and disinfecting products last year and liquidation of legacy beauty stock ahead of its Beauty Restage marketing campaign.
Growth in HNST’s core categories – diapers and wipes, and skin and personal care – is expected to be in mid-single digits following Q1, driven by product innovation and distribution gains with new retail partners.
Household and wellness category will likely face continued headwinds due to reduced demand for sanitizing and disinfecting products.
HNST continues to face a volatile input cost environment and expects 2022 gross margin to be roughly flat vs. 2021.
Gross margin is expected to improve over the course of the year due to implementation of mid-single digit price increases to help offset inflationary pressures.
HNST estimates 2022 adj. EBITDA loss of ~$5M-10M, which includes an expectation of Q1 adj. EBITDA loss of ~$10M.
Adj. EBITDA will likely improve in H2 of 2022 due to price hikes, margin-accretive innovation and new distribution.
