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The Honest Company

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The Honest Company, Inc.
Company typePublic
Nasdaq: HNST
IndustryRetail
Founded2011 (2011)
FoundersJessica Alba, Christopher Gavigan, Brian Lee
HeadquartersLos Angeles, California
Area served
United States, Canada, Europe
Key people
CEO Carla Vernón,[1] Chief Creative Officer Jessica Warren[2]
ProductsConsumer goods
RevenueIncrease US$318.6 million (2021)
Decrease −US$38.7 million (2021)
Number of employees
187 (full-time) (2021)
Websitehonest.com

The Honest Company, Inc. is an American digital-first consumer goods company, based in Los Angeles and founded by actress Jessica Alba, Christopher Gavigan, and Brian Lee. The company had $319 million in 2021 sales, and was valued at roughly $550 million as of February 2022.[3] Chief Executive Officer Carla Vernón is one of the first Afro-Latina CEO of a U.S. publicly traded company.[4][5] The Honest Company has raised multiple rounds of venture capital, and went public via initial public offering in May 2021, generating over $100 million in capital.[4][6] Honest serves the United States, China, Canada, and Europe.[7]

History

Jessica Alba, co-founder of The Honest Company

Company co-founder Jessica Alba was inspired by the 2008 birth of her first child and her own history of childhood illnesses to create a company that provided an alternative to baby products with ingredients such as petrochemicals and synthetic fragrances.[8] The company was launched in 2012 with 17 products.[9]

In 2013, The Honest Company's sales reached $50 million.[10] Honest raised $70 million from venture capitalists in the summer of 2014 in preparation for an initial public offering.[9][11] As of August 2014, the company's products were available at retail stores in the United States and Canada.[12] The financing put a value on the company of $1 billion.[10] Prior to the 2014 round of financing led by Wellington Management Company, the company had raised $52 million in financing from ICONIQ Capital, General Catalyst Partners, Institutional Venture Partners and Lightspeed Venture Partners.[12]

In November 2014, 80% of the company's $170 million in sales were online via a monthly subscription service with the remainder being done in department stores and discount warehouses.[10][13]

In 2016, The Honest Company moved its headquarters from Santa Monica to the Playa Vista neighborhood of Los Angeles.[14] The following month, it announced a new round of funding that generated an additional $100 million of venture capital, implying a valuation of $1.7 billion.[15] In late 2015, the company acquired Alt12 Apps, the makers of popular apps such as Baby Bump, Pink Pad, and Kidfolio.[16]

In March 2017, The Honest Company announced that Nick Vlahos would replace Brian Lee as chief executive officer. Vlahos worked on several Unilever brands, including Burt's Bees, Brita and Green Works. Brian Lee would remain on the board in an advisory role.[17]

In October 2017, The Honest Company closed a series E round of funding. After settling two lawsuits in the summer of 2017, the valuation was set at $19.60 per share down from the Series D shares sold in 2015 at $45.75, and market value of less than $1 billion.[18]

In April 2021, The Honest Company officially filed for an initial public offering.[19] The company began trading on the NASDAQ exchange with ticker symbol HNST on May 5, 2021.[20] The IPO raised $412.8 million.[21]

Products and distribution

The Honest Company markets its products as safe and eco-friendly.[22] The company does not use "health-compromising chemicals or compounds", including the "No List" of ingredients that it promises to never allow in its products.[23][24] Whole Foods and Costco were The Honest Company's initial retail distributors.[10] The company began selling in Target Corporation on June 15, 2014.[25] Other stores that carried the company's products by mid 2014 included Buy Buy Baby and Nordstrom.[26] By the end of the third quarter of 2014, the company carried 90 products.[8] Its leading seller was diapers.[9]

Under Vlahos as CEO, Honest Company expanded its internal laboratories and R&D team and opened a fulfillment center.[27] In 2022, Honest expanded and formed retail partnerships with Walmart, Ulta, and GNC.[28][29] In the Ulta partnership, Honest released its first acne line.[30] In the fall of 2022, Honest Company partnered with SuperOrdinary to launch in China on the e-commerce platform, Tmall Global.[31]

Critical reception

In March 2016, it was reported by The Wall Street Journal that Honest's liquid laundry detergent product contained "a significant amount" of sodium lauryl sulfate or SLS, a synthetic surfactant that the company claimed it would "never consider for use in anything. Period."[32] Honest's detergent is sourced from Earth Friendly Products (EFP) which did not test for SLS. EFP in turn purchased untested chemicals from Trichromatic West which also did not test for SLS.[33] EFP had removed its claims of SLS-free product from its own website in late 2015.[34]

In April 2016, Good Morning America reported that The Honest Company was being sued for representing its infant formula as organic even though the product contained 11 synthetic substances prohibited under federal law in organic products.[35] Honest Company stated that the infant formula had been FDA approved and certified USDA Organic in accordance with the National Organic Program. In December 2016, the Los Angeles Superior Court entered judgment for The Honest Company, dismissing the complaint.[36]

Honest Beauty

On September 9, 2015, the company introduced the Honest Beauty brand as a separate entity with its own website and logo.[37] Its products are derived from botanicals free of parabens, phthalates, petrolatum, sulfates and chemical sunscreens. On September 25 of that year, the brand opened a pop-up retail shop in The Grove.[38] The brand began selling the beauty line at Target in spring 2017.[39]

Honest Beauty debuted in Western Europe (Germany, France, Spain, Italy, Poland, the Netherlands, and Austria) in 2019.[40] Honest Beauty was sold exclusively by Douglas stores in Europe.[41]

In 2021, Honest Beauty redesigned its brand packaging, using sustainable and recyclable materials. At the same time, it launched the Daily Defense skincare collection to protect from environmental pollutants. In 2022, Honest Beauty launched a four-step daily skincare routine for sensitive skin.[42]

Notes

  1. ^ "Form 8-K Appointment of Chief Executive Officer". www.sec.gov. 9 December 2022. Retrieved 21 February 2023.
  2. ^ "10-K for Honest Company for quarter ending September 30, 2022". www.sec.gov. 12130 Millennium Drive, Los Angeles. 30 November 2022. Retrieved 21 February 2023. Chief Creative Officer, Jessica Warren{{cite web}}: CS1 maint: location (link)
  3. ^ "Jessica Alba opens up about building her $550 million The Honest Company: 'There were no expectations for me to be successful'".
  4. ^ a b Fine, Howard (19 December 2022). "Honest Co. Taps Black Woman and Industry Veteran Carla Vernón as Next CEO". Los Angeles Business Journal. Los Angeles, CA. Retrieved 21 February 2023.
  5. ^ Manso, James (13 December 2022). "The Honest Co. Names Carla Vernón CEO". Women's Wear Daily. Retrieved 21 February 2023.
  6. ^ Chin, Kimberly (5 May 2021). "Jessica Alba's Honest Co. Jumps in Market Debut". Wall Street Journal. Dow Jones. Retrieved 21 February 2023.
  7. ^ "THE HONEST COMPANY". Tower Equity.
  8. ^ a b O'Conor, Claire (June 15, 2015). "How Jessica Alba Built A $1 Billion Company, And $200 Million Fortune, Selling Parents Peace Of Mind". Forbes. Retrieved October 28, 2017.
  9. ^ a b c Blakely, Lindsay (November 2014). "How Jessica Alba Proved Her Doubters Wrong". Inc. Retrieved November 10, 2014.
  10. ^ a b c d Chapman, Lizette (August 26, 2014). "Jessica Alba's The Honest Co. Raises $70M, Preps for IPO". The Wall Street Journal. Retrieved November 12, 2014.
  11. ^ Lorenzetti, Laura (August 26, 2014). "Jessica Alba startup The Honest Co. raises $70 million as it heads toward IPO". Fortune. Retrieved March 10, 2015.
  12. ^ a b Johnson, Zach (August 27, 2014). "News/Jessica Alba's The Honest Company Valued at Nearly $1 Billion Two Years After Its Launch". Eonline. Retrieved November 12, 2014.
  13. ^ MacMillan, Douglas & Rolfe Winkler (August 13, 2015). "Jessica Alba's Startup, Honest, Valued at $1.7 Billion". The Wall Street Journal. Retrieved August 13, 2015.
  14. ^ "Honest Co. moving headquarters to Playa Vista". LA Biz. Bizjournals.com. July 28, 2015. Retrieved July 29, 2015.
  15. ^ MacMillan, Douglas; Winkler, Rolfe (2015-08-13). "Jessica Alba's Startup, Honest, Valued at $1.7 Billion". Wall Street Journal. ISSN 0099-9660. Retrieved 2023-06-03.
  16. ^ "Jessica Alba's Honest Company quietly acquired BabyBump, Pink Pad app-maker last year". Mobihealthnews.com. February 8, 2016. Retrieved February 8, 2016.
  17. ^ Thomas, Lauren (March 16, 2017). "Jessica Alba's Honest Company just got a new CEO". CNBC. Retrieved March 17, 2017.
  18. ^ Korosec, Kirsten (October 5, 2017). "Jessica Alba's Honest Co. Cuts Its Valuation in New Funding Round". Fortune. Retrieved June 4, 2018.
  19. ^ "Jessica Alba's Honest Company files for IPO". CNBC. April 9, 2021.
  20. ^ "Jessica Alba's Honest Company Rallies in Debut". Yahoo! Finance. 5 May 2021.
  21. ^ "Honest Company first quarter 2022 results miss the mark". Cosmetics Business.
  22. ^ Greenfield, Rebecca (September 9, 2014). "How The Honest Company Nailed The Formula For Eco-Friendly Products". Fast Company. Retrieved November 10, 2014.
  23. ^ Moran, Gwen (September 9, 2015). "Jessica Alba's Honest Company Just Launched a Beauty Line". Entrepreneur. Retrieved September 16, 2015.
  24. ^ Zarya, Valentina (August 14, 2015). "Telling the truth pays: Jessica Alba's Honest Company is worth $1.7 billion". Fortune. Retrieved September 16, 2015.
  25. ^ "Jessica Alba's The Honest Company Will Launch at Target". Target Corporation. June 1, 2014. Retrieved November 13, 2014.
  26. ^ Chesters, Laura & Maria Tadeo (August 28, 2014). "The Honest Company: Jessica Alba's diaper business valued at $1 billion ahead of IPO". The Independent. Archived from the original on 2022-06-18. Retrieved November 13, 2014.
  27. ^ Schiffer, Jessica (28 May 2020). "The Honest Co. on growing sales to $350m during a crisis". Vogue Business. Vogue.
  28. ^ "Honest Co. Hopes Retail P'ships With Walmart, Ulta, GNC Will Reverse Sales Slump". PYMNTS. 13 May 2022.
  29. ^ "The Honest Company Launches at Walmart to Expand U.S. Distribution". yahoo finance. 19 July 2022. Retrieved 9 August 2022.
  30. ^ "EXCLUSIVE: Jessica Alba's Honest Beauty Launches at Ulta Beauty Stores, Introduces First Acne Line". Women's Wear Daily. 15 July 2022.
  31. ^ Lobad, Noor (2 September 2022). "Jessica Alba's The Honest Co. Launches in China". WWD. Women's Wear Daily.
  32. ^ Ng, Serena (10 March 2016). "Laundry Detergent From Jessica Alba's Honest Co. Contains Ingredient It Pledged to Avoid". The Wall Street Journal. Retrieved March 10, 2016.
  33. ^ Sherman, Erik (March 11, 2016). "Jessica Alba's Honest Company Brand Is Burned: Keeping a promise to customers takes more than wishful thinking". Inc. Retrieved March 15, 2016.
  34. ^ Ng, Serena (March 14, 2016). "Maker of Honest Detergent Changed Its Claims: Earth Friendly Products removed marketing claims about sodium lauryl sulfate from its website last year". The Wall Street Journal. Retrieved March 15, 2016.
  35. ^ KIM, SUSANNA (April 28, 2016). "Jessica Alba's Honest Company Sued Over Organic Infant Formula". Good Morning America (ABC). Yahoo News. Retrieved May 1, 2016.
  36. ^ O'Connor, Clare. "Court Dismisses Honest Co. Baby Formula Suit As Organic Group Files Appeal". Forbes. Retrieved July 20, 2017.
  37. ^ APATOFF, ALEX. "Jessica Alba Launches Line of Beauty Products for The Honest Company were awful". People. Retrieved July 20, 2017.
  38. ^ Medina, Marcy (August 19, 2015). "Jessica Alba Launches Honest Beauty". Women's Wear Daily. Retrieved September 16, 2015.
  39. ^ Brookman, Faye (22 March 2017). "Target adds Jessica Alba's Honest Beauty to its merchandise mix starting March 26". Los Angeles Times. Retrieved July 20, 2017.
  40. ^ Blakely, Lindsay (May 29, 2018). "Jessica Alba's Honest Company Bets Big on Makeup". Inc. Retrieved June 4, 2018.
  41. ^ "Honest Beauty debuts in Europe". Cosmetics Business.
  42. ^ "Honest Company Redesigns Beauty Line & Announces New Sustainable Packaging Initiative". Beauty Packaging.
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