Honest Company IPO: What Investors Should Know About Jessica Alba's Lifestyle Company

A clean lifestyle product company founded by actress Jessica Alba has announced plans to go public with a planned IPO.

The IPO: The Honest Company HNST filed to go public and list on the Nasdaq with the ticker HNST.

About The Honest Company: The company was founded by Alba in 2012. The brand was created after the actress struggled to find clean products and saw allergic reactions to several products due to a large number of ingredients in them.

“You shouldn’t have to choose between what works and what’s good for you,” Alba said.

The Honest Company calls itself a “conscious living company for today and tomorrow.”

Over the years, the company has expanded from being strictly a diapers and wipes company to now covering every age and every life stage for its customers. Diapers are seen as a strategic consumer acquisition by the company and as an entry point to getting customers to buy other products from the company’s portfolio.

Unilever plc UL was rumored to be considered acquiring the company back in 2016. 

After the IPO, Alba is expected to own 6.7% of The Honest Company.

Related Link: 10 IPOs To Watch Out For In 2021

Financials: The Honest Company had revenue of $235.6 million in fiscal 2020, a 27.6% year-over-year increase.

Diapers and wipes made up 63% of the company’s revenue and saw sales increase 16.4% year-over-year. Skin and personal care segment sales represented 26% of company sales in 2020 and were up 55% year-over-year. The household and wellness segment made up 11% of the company’s revenue and was up 116.5% year-over-year in 2020.

The Honest Company utilizes an omnichannel approach that saw revenue split 55% from digital sales and 45% from retail sales in 2020.

Costco Wholesale Corporation COST, Target Corporation TGT and Amazon.com Inc. AMZN were mentioned in the prospectus as key retail partners.

Growth Ahead: The Honest Company plans on continuing its expansion as the clean and natural product segments are strong and a growing addressable market size.

The company wants to expand its digital channel and continue the execution of its omnichannel approach.

(Photo: Jeff a.k.a wumpiewoo via Flickr Creative Commons)