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Honest Posts Q1 Loss, Sales Up 12%

The Honest Co.(HNST), the consumer goods company founded by actress Jessica Alba in 2011, Wednesday reported its first earnings results as a public company. The company posted a loss for the first quarter, hurt largely by higher operating costs, while revenues grew 12% driven by growth across skin and personal care as well as household and wellness segments.

"We had a strong start to 2021, reporting double-digit sales growth. This growth reflects the ongoing success of our strategic initiatives focused on Content, Community and Commerce, powerful innovation and category expansion," said CEO Nick Vlahos.

Alba and her business partner Christopher Gavigan had launched The Honest Company in January 2012, selling a collection of household goods, diapers, and body care products. The company was successful, and was valued at $1 billion as of 2014. Last month, Honest had priced its IPO of 25.5 million shares at $16 per share raising $413 million.

Revenues increased 12% to $81.0 million from $72.4 million last year, driven by strong volume growth in the company's skin and personal care products and in the company's sanitization and disinfecting products introduced in household and wellness in the second half of 2020.

Skin and personal care revenues increased 42% driven by strong volume growth across the company's digital and retail channels. Household and Wellness revenues increased 53%, driven by sales from sanitization and disinfecting products.

Revenues from diapers and wipes, the company's biggest segment, were down 2% as the company transitioned to its Clean Conscious Diaper.

Operating expenses increased 30% to $32.5 million or 40% of revenue, compared to $25.1 million or 35% of revenues last year. The increase was largely due to increased marketing spend, higher selling, general, and administrative expense and other transaction-related expenses.

Net loss for the quarter was $4.5 million or $0.13 per share, compared to net income of $0.6 million or $0.01 per share last year.

HNST closed Wednesday's trading at $17.65, down $0.63 or 3.45%, on the Nasdaq. The stock further slipped $0.05 or 0.28% in the after-hours trade.

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