Summary
- The Honest Company (HNST) reported Q3 revenue down 6% YoY, missing estimates, and essentially broke even with $0.01/share earnings.
- HNST’s diaper segment is shrinking, and management is shifting focus away from diapers, while baby care and wipes showed modest growth.
- Transformation 2.0 involves exiting Canada, D2C, and apparel, cutting $20M in revenue but aiming for $8M annual cost savings after $25-35M restructuring costs.
- With shrinking revenue, a vague turnaround plan, and ongoing revenue declines, HNST shares likely face further downside before any recovery materializes.
Tom Werner/DigitalVision via Getty Images
Just before Q3 earnings, I [recommended](https://seekingalpha.c…
Summary
- The Honest Company (HNST) reported Q3 revenue down 6% YoY, missing estimates, and essentially broke even with $0.01/share earnings.
- HNST’s diaper segment is shrinking, and management is shifting focus away from diapers, while baby care and wipes showed modest growth.
- Transformation 2.0 involves exiting Canada, D2C, and apparel, cutting $20M in revenue but aiming for $8M annual cost savings after $25-35M restructuring costs.
- With shrinking revenue, a vague turnaround plan, and ongoing revenue declines, HNST shares likely face further downside before any recovery materializes.
Tom Werner/DigitalVision via Getty Images
Just before Q3 earnings, I recommended shorting The Honest Company (HNST). I’m now writing to provide an update on the quarter and the outlook for shares. The company basically broke even, earning $0.01/share, but revenue missed
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