Wipes and diaper maker Honest Co. is planning significant price increases this year for its products, in contrast with rival consumer-goods makers that are taking a more cautious approach amid high levels of inflation.
(Bloomberg) — Wipes and diaper maker Honest Co.
is planning significant price increases this year for its products, in contrast with rival consumer-goods makers that are taking a more cautious approach amid high levels of inflation.
The company, which reported quarterly earnings on Tuesday, said the higher prices, planned for mid-year, will reflect the premium nature of its goods such as baby balms, body lotions and multisurface cleaners.
Meanwhile, Los Angeles-based Honest is exiting Europe and Asia and discontinuing some under-performing items as new Chief Executive Officer Carla Vernón, who came into the top role from Amazon.com Inc.
in January, retrenches operations.
Competitors have voiced concerns that relentless increases to the rate of inflation are pinching pocketbooks. Huggies and toilet-paper maker Kimberly-Clark Corp.
said last month that it expects its price increases to subside into this year and warned that some customers are switching to less-expensive private-label options. Edgewell Personal Care Co., the maker of Schick razors and Banana Boat sunscreen, also said it’s not anticipating any more price hikes this year, and will be more selective about them in the future.
Honest, founded by actress Jessica Alba, has been under pressure as higher prices erode consumer purchasing power — especially in the diaper category.
The company, which said last year it would raise prices in 2023, has also struggled to meet the expectations set at its 2021 initial public offering. The stock is down almost 90% from then.
In its quarterly statement, Honest said the exit of Europe and Asia, along with discontinuing some products, will help it boost profitability.
First-quarter revenue of $83.4 million in the quarter ended March 31 surpassed the average analyst estimate of $71.5 million, while the company’s net loss was wider than expected.
The stock jumped as much as 14% on Tuesday in New York, the most in nearly six months, paring the company’s year-to-date decline to about 40%.
–With assistance from Daniela Sirtori-Cortina.
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