Olaplex Holdings, Inc. (NASDAQ:OLPX) Q3 2023 Earnings Call Transcript

And even customers like Amazon, on the back of the investments we’ve been putting into that part of the business.Our DTC business was a little bit weaker internationally as we’ve held back on some investments to manage some of the market dynamics there. So just thought it would be helpful to give that additional color on Direct-to-Consumer.In Pro, as I just mentioned earlier, actually the cadence through the quarter is actually a slight improvement as we exited Q3 on the back of the investments we put in place there and in retail, we sold in less holiday kits into the Specialty Retail channel in the third quarter of this year versus the third quarter of last year.That’s appropriate. That’s to measure it with the other trends we’ve seen in the business and that’s the reason why the sell-in or the net sales decline on Specialty Retailis a little bit worse in the third quarter than the sale out.So then you asked about what does that mean as we go into Q4, it’s actually a very similar trend.When we say Q3 was within our expectations and good progress on stabilization that’s exactly what we’re saying about the projection we’ve made for Q4, as implied in this guidance.So yeah, there’s a little bit of noise, quarter-to-quarter sell-inversus sell-out, but absolutely the guidance we provided implies and assumes a similar stable seasonally adjusted trend for the business in the fourth quarter and lastly, you asked about, what does stabilization look like for us over the next 12 months?

It’s continuing to follow through with all the priorities we’ve talked about. We’re going to keep on investing against the business.We’re going to keep on measuring that learning from it and optimizing that investment in a balanced way, not just lower funnel marketing, but the upper funnel marketing that we’ve been putting in place. That’s really about the brand building we want to do here and we know that’s going to take time.That takes time to fully have its impact on the business. So over the next 12 months, we expect to see even more impact from that as those investments have had some time to take root with our consumers, with our stylists. So, we’ll say it again,top priority for the back half of this year has been stabilization of the demand trend.

We believe this call and this update shows really good progress against that goal and that’s going to set us up to a return to growth, a long-term profitable growth for this business that we know we can achieve.

Operator: Our next question comes from the line of Dana Telsey with Telsey Advisory Group.

Dana Telsey: Hi, good morning, everyone. As you think about the expense structure of the business, Eric, and obviously the marketing investment this year, over next year or 2025, what is the expense structure of the business?How do you look at the puts and takes and what could be seen as a steady state and also on new products how are you thinking about new products going forward and timing?

Eric Tiziani: Again, I would just say that our focus has been stabilization of the trend in the balance of 2023 and investing in our sales and marketing with this test, learn, and optimize approach which we believe is really helping drive that stabilization of the demand trend and setting us up for the right foundation, the right capabilities and poised for return to growth in future.We’re not going to comment here on what that investment level looks like in 2024 or 2025. We intend to come out with our 2024 guidance at the right time that would, by precedent beyond our next call, our Q4 results call and we look forward to sharing more at that time.In the meantime, we’re going to continue to invest behind the brand where we see opportunities and the other part of your question was new products where we still believe this is one of the big reasons that we have such, such big opportunity ahead of us.We remain and we still have a quite a limited assortment.