Release Date: May 14, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Waldencast PLC (WALD, Financial) reported a strong adjusted gross profit margin of 76.4%, reflecting a year-over-year increase.
- The company achieved high single-digit growth in US retail sales for Milk Makeup, driven by successful product launches like the Hydro Grip gel.
- Obagi Medical saw a 7.1% increase in net revenue, supported by strategic supply chain improvements.
- Waldencast PLC (WALD) is expanding its retail footprint with Milk Makeup's successful launch in Ulta Beauty stores.
- The company is actively working on supply chain enhancements to improve operational efficiency and support long-term growth.
Negative Points
- Waldencast PLC (WALD) experienced a 4.1% decline in net revenue compared to the first quarter of the previous year.
- Milk Makeup's international sales faced challenges due to tough comparisons with the previous year's distribution expansion.
- The company encountered supply chain disruptions, leading to out-of-stock issues for key products at Obagi Medical.
- There was a decline in Milk Makeup's revenue by 15.1%, attributed to international sales contraction and inventory adjustments.
- Waldencast PLC (WALD) is facing pressure from a decelerating beauty market and a fluid macroeconomic environment.
Q & A Highlights
Q: Can you expand on the supply chain restructuring for Obagi and how it might improve operations and innovation success?
A: Michel Brousset, CEO, explained that Waldencast is working to enhance the flexibility and responsiveness of its supply chain. The company is streamlining the flow of goods and integrating online warehousing capabilities to better meet demand. This restructuring aims to improve reliability and speed, which were previously lacking, and should help address out-of-stock issues that impacted growth in Q1.
Q: Can you discuss the slowdown in the physician channel for Obagi?
A: Michel Brousset clarified that there wasn't a slowdown in the physician channel itself. Instead, the slowdown was due to the lack of tailwinds from last year's Amazon model conversion. The physician channel remains robust, and Waldencast expects it to be a growth source this year.
Q: Could you provide more color on sell-through trends versus sell-in for Obagi and Milk, and your pricing strategy given tariff dynamics?
A: Michel Brousset noted that Milk Makeup saw a significant difference between sell-out and sell-in, with high single-digit growth in US retail sales. The company is monitoring tariffs and believes any impact is manageable, with potential low to mid-single-digit price increases if necessary.
Q: How is the Ulta launch for Milk Makeup performing, and are there plans for further expansion?
A: Michel Brousset reported positive early results from the Ulta launch, with a focus on incrementality and productivity. While currently in 600 doors, Waldencast is evaluating potential further expansion within Ulta's network based on initial success.
Q: Can you discuss SG&A expectations and marketing investment strategies?
A: Michel Brousset stated that while SG&A will grow in absolute terms, operational leverage is expected, with costs growing slower than sales. Marketing investments will increase, focusing on top-of-funnel advertising for Milk Makeup and consumer outreach for Obagi to drive brand awareness and growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
