Olaplex is a case study of the power of social media. Content creators helped accelerate sales of the bond builder and, more recently, dented its reputation with claims of hair damage.
Caught in the crosshairs is JuE Wong, who is stepping down as the CEO of troubled Olaplex. Amanda Baldwin, most recently CEO of Supergoop!, succeeds Wong and will take over in early 2024. John Bilbrey, the company’s Executive Chair, assumes the CEO role in the interim. Olaplex, which trades under the symbol OPLX on NASDQ closed at $1.77 on Thursday, relatively unchanged.
Wong, a seasoned beauty veteran known for leading brands, including Elizabeth Arden, Moroccanoil, Perricone, StriVectin, and Astral Health and Beauty, joined Olaplex in 2020. She shepherded growth through the pandemic, leading to a successful IPO in 2021.
Company sales started staggering after negative posts and a lawsuit filed by 28 women in February 2023, blaming Olaplex Nº.0 and Nº.9 for causing hair loss, breakage, brittle hair, bald spots, and irritation. Olaplex responded by stating that the products did not cause harm and are safe and effective. The lawsuit ultimately did not hold up: on July 11, a court granted Olaplex’s motion to sever and dismiss all but the first named plaintiff, and also dismissed the operative complaint with leave to re-file on the grounds that it contained allegations that were not relevant to the claims of the one remaining plaintiff. On July 24, the remaining plaintiff filed a notice, voluntarily dismissing her claims without prejudice.
Despite stepped up marketing and educational efforts, Olaplex sales diminished. The company has forecasted net sales in the $445 million to $465 million range for fiscal 2023. Sales in fiscal 2022 tallied $704 million. Second quarter results were significantly lower than expected, with a 48% drop in revenue to $109 million due to poor performance in the professional and specialty retail segments, according to Seeking Alpha.
“Reasons for the precipitous drop include weakening demand, rising competition, rebalancing inventories, and poor performance in the professional channel. Specifically, sales through the professional channel dropped by 61% to $41 million, retail sales dropped by 54% to $30 million, and direct-to-consumer sales dropped by 6.4% to $39 million, demonstrating widespread weakness,” according to a Seeking Alpha report.
Passionate about Olaplex, Wong posted frequently about her love of the products on Instagram and TikTok — well beyond the call of duty for any CEO. She even used TikTok to personally address what she said was misinformation about the brand. In a February post, Wong assured viewers that Olaplex is safe and is supported with clinical testing. “I believe in the safety and efficacy of our products and want to reassure our community of professional stylists, customers, and fans that they continue to use our products with confidence,” Wong said on TikTok.
“Olaplex as a brand is still strong. Ultimately when tumult and bad news continue in any company, someone ends up being the fall guy or girl,” says industry veteran Jeffrey Ten. “I think the addition of Amanda Baldwin will make some changes for the best.”
Baldwin steps into the role ready to return Olaplex to its OG status. “Olaplex stands apart as a category creator redefining what is possible through the combination of beauty and science. I see tremendous opportunity to help the brand and the business reach their full potential by further deepening engagement with stylists, retailers, and consumers through breakthrough product innovation, sharp storytelling, and a dynamic global omnichannel strategy,” Baldwin said in a press release.
Experts say Baldwin, who prior to Supergoop! held roles at L Catterton, Dior Beauty, and Clinique, is well-prepared for the battle.
“Amanda Baldwin is a familiar face in the beauty industry with almost 20 years of industry experience,” says Ashley Helgans, Senior Analyst for Jefferies. “We believe her broad experience across a number of roles in the beauty industry, especially marketing, will be positive for the company as it works to reposition itself and repairs brand perception.”
The appointment should be a positive for the stock since many investors believe management change is necessary for a brand turnaround, Helgans adds. She suggests Baldwin’s experience in skin care translates into hair care and could be beneficial for expansion into skin.
One of the first tasks on Baldwin’s to-do list will be to return Olaplex to its leadership position in an expanding field of bond builders including K18, Epres, Redken, and Everpure. Searches for K18 and Redken Bonding started outpacing Olaplex in the spring of 2022.
“Olaplex expanded way beyond salon and competitors jumped in. Amanda will need to really scrutinize distribution to win back salons trust,” suggests Ten. “As far as all the knockoffs, no one can control that except attorneys with strong IP registrations.”
Jodi Katz, CEO and Founder of Base Beauty Creative Agency, believes Baldwin has the expertise to turn Olaplex around.
“Amanda is nimble, creative, and insight driven. For Olaplex, she brings a passion for data and quick learning across all areas for consumers and pros in marketing, distribution, and product assortment, to make sure that Olaplex rises above a sea of sameness,” says Katz.
“During her time at Supergoop!, which I followed very, very closely since I worked with a competitive brand at the time, Amanda’s inventive marketing and leadership expertise would shine through daily in the brand’s ‘test and learn approach’ to earned, owned, and paid innovations,” she adds.
Last month, Olaplex fired back at the flood of dupes with a campaign designed to prove that nothing beats the original. Earned and paid influencers were gifted with a “new” product called Oladupe and consumers were driven to a site to register for a free bottle. The product was revealed four days and 4 million views later to be Olaplex No 3 Hair Protector.
Despite efforts to quell misinformation, the damage was irreversible. “Growth has continued to moderate as traction among the pro stylist community has wavered with negative headlines. Share of voice has decreased as more bonding brands entered the market,” Helgans says. During its second quarter analyst call, the company confirmed it had not seen the anticipated sales lift from its educational and marketing efforts.