Olaplex CEO JuE Wong joins Yahoo Finance Live to discuss her hair care brand's growth and expansion within the beauty and hair care markets.
EMILY MCCORMICK: Olaplex has seen demand for its premium hair care products soar. The company posted third-quarter sales growth of 81% in its first quarterly report since going public in late September. We're welcoming in Olaplex president and CEO, Jue Wong now for more. And Jue, thank you so much for joining us this morning. Can you tell us a little bit about what's been helping drive your growth in this latest quarter?
JUE WONG: I think if you really look at what we have-- and first of all, I have to say thank you for having me. But if you look at what Olaplex is, we are a science-enabled, technology-driven beauty company. And when you look at the response rate to our products, it truly works. And 90% of our customers actually say we produce a better product and a healthier product for them, and we have an NPS score of 71%. So all of this really drives to the point that when a product works you really retain and recruit customers.
JULIE HYMAN: And I want to talk-- it's Julie here. I want to talk a little bit about where those customers are coming from. Because originally Olaplex was more known as a salon product, right? And you still get the majority of your sales through salons but you're also selling a lot to consumers through various retail channels and also directly. What does that ideal mix look like to you? Do you want to put more product directly in the hands of consumers?
JUE WONG: Well, that's a fantastic question because we are truly an omnichannel synergistic brand. You know, most brands talk about being an omnichannel brand. We are truly that because most companies try to manage multichannel and manage channel conflict. In our case, our channels are very synergistic.
You mentioned about our professional channel, our professional channel lends us credibility and authority. And our retail channel drives what we call brand awareness. And direct to consumer allows convenience while helping us get the consumer insights. And we have seen, as you have seen from our results, all our three channels are rising, plus 58% in pro, plus 127% in retail, and plus 88% in direct to consumer. All this points to a very mutually reinforcing omnichannel strategy that we have.
EMILY MCCORMICK: And following up on that notion of professional, of course, comprising nearly half of all your sales here. How sensitive has Olaplex's business been to the reopening and to consumers' propensity to go back out in person to hair salons?
JUE WONG: Yes, I mean, what we are finding is that there's one place that is not going to change and that is women will want to continue to go see their professional stylist or their professional colorist. And we have seen a really good response to professionals wanting more of our products to help with their clients as they come back in. I mean, we all remember the days when those of us who use box colors, there's a lot of damage to the hair as such, you can only go darker, you can't go lighter with box colors. And so sometimes when you get back to the salon to really lighten the hair and to really help with the chemical treatment of that hair, it takes a lot more for the stylist to really address. So this is where Olaplex comes in because our main staple is to really address damaged hair.
BRIAN SOZZI: It has been some time since I've seen the type of margins you are getting in a consumer products business. How long do you think you can maintain your margins at current levels?
JUE WONG: I think what is important to note is to maintain the strong margins that we have, you have to have a strong supply chain, you've got to make sure that your goods has the discipline of keeping to a cost level that is conducive for the customers so that you don't have to take up pricing. And so when I talk about our supply chain, we manage our communication and our relationships with our 3PLs and our 3PMs, and the ability for us then to drive efficiencies as the result, increased volume help tremendously with our gross margins.
JULIE HYMAN: Jue, it's Julie again here. I got to be honest with you, it's sort of mind-blowing to me that a hair care company is a $17 billion company. I mean, I'm looking on your site, I think you guys have around 10 products is that right? I mean, it's just sort of amazing to me, and I'm curious what the long-term growth story here is? What are your next products you're going to come out with, for example, and where is that next phase of growth going to come from?
JUE WONG: Yeah. Again a fantastic question because if you look at the TAM for global hair care per Euromonitor, it's a $77 billion TAM. And we are but an amoeba in this space. So we have a huge runway, not only in our core business but also in where we are going to look to take the business. Because hair care has such tremendous growth, recent statistics have shown that the fastest-growing category in beauty is hair care.
EMILY MCCORMICK: All right, we'll leave it there, Jue Wong, president, and CEO of Olaplex. Thank you so much for joining us.