Waldencast, the beauty conglomerate that owns Milk Makeup, Obagi skincare and injectables maker Novaestiq delayed the release of its first half earnings and lowered its full-year outlook Monday, announcing it has begun a strategic review of its operations.
The company now expects low-to-mid single digit revenue growth, with an earnings before interest, taxes, depreciation and amortisation (EBIDTA) margin in the low-to-mid teens, whereas it previously forecast both in the mid-teens.
In a press release, co-founder Michel Brousset noted that both Milk Makeup and Obagi had performed well in the first half of the year despite the challenging market, but that out-of-stock issues and the decision to exit certain distribution points for Obagi had weighed on earnings. He added that some international markets were proving challenging and would need further marketing investment.
The company has also retained financial services firm Lazard to look into a “broad range of strategic alternatives”, it said in the release, focused on maximising shareholder value. Waldencast said it would not comment on the status or timing of this process.
In a note, Raymond James analyst Olivia Tong noted that its brands, which are carried by the likes of Sephora and Amazon, have the opportunity for further distribution, but that the overall business model has struggled to gain traction since going public via special purpose acquisition vehicle (SPAC) in 2021.
“In our view, the combination of low float and high leverage has created further challenges for the company to deliver shareholder value,” Tong wrote. Raymond James also lowered its net sales growth forecast for the company to 3 percent year-on-year, versus a previous estimate of 11.6 percent.
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