Olaplex Holdings, Inc. (NASDAQ:OLPX) Q4 2022 Earnings Call Transcript

Lauren Lieberman: Okay. And then my other question was just — I thought the focus on No. 3 was really interesting, and particularly in the context of an idea of a consumer having a more constrained wallet and needing to make choices so that maybe the full regimen is sort of less attainable, let’s call it. To what degree is that factoring in when you’re thinking about marketing and education sort of being a one product versus a regimen approach? And is that going to be part of the marketing going forward?

JuE Wong: Thanks, Lauren. I’ll take the question, Lauren. One of the things that’s important to note is that Olaplex is a bond-building treatment that plays in segments of hair care that includes shampoo, conditioner, styling as well as hair mask. And when you look at that, the foundation of it is having your bonds repaired. When you get that repair, everything else falls into place, and that’s why the focus on No. 3 because there’s no other product or technology out there that can truly say it repairs the disulfide bonds the way we do. You have seen us with our patent. You have seen us articulated the pattern. While that is really all great, the science is powerful, we want to make sure that we are in a friendly consumer facing where the consumers can understand why bond building is such — or bond repair treatment is such an important foundation for them.

And then once that gets message well, educated well, and they understand the need for that, then the rest of the regimen becomes very much intuitive, right? Because you have to shampoo and condition your hair. You have to — you do style your hair, and you also need to treat your head with a hair mask at least once or twice a week. So we believe by focusing on No. 3 back to our core, it will halo the rest of our other SKUs.

Lauren Lieberman: Okay. Great. And then sorry, one more. It was mentioned in the release on cost savings. G&A kind of as you look towards the back half, that kicking in. I was just curious, I was surprised to hear a mention of cost savings at all just given how the company has been. So how significant is this role of cost savings as you think about the profitability and OpEx equation for €˜23?

Eric Tiziani: Of course, Lauren. As a normal course of business, we’re always going to be looking for opportunities to find efficiencies in our cost base that don’t have anything to do with those investments we’re making in sales and marketing and the core capabilities of the organization. That’s where we’re putting our money. So to give you an example, nonpeople-related costs in G&A, some of the money that we spend with consultants, those are efficiencies that we’ve been driving in 2022 and tend to in 2023. And the other key area here is in our cost of goods as we can better negotiate prices with suppliers as we can find efficiencies in how we go to market. We put a fuel for growth program in place to gather ideas from all across the organization to do exactly that. So I look at it as the classic good cholesterol, bad cholesterol type of approach.

Operator: Our next questions come from the line of Susan Anderson with Canaccord Genuity.

Susan Anderson: I was wondering if you could talk about just sell-throughs in the retail channel. I’m not sure if you mentioned that versus obviously sell-ins. I’m curious kind of where Olaplex performed in the quarter versus the industry.