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Honest Co. jumps into debut, Alba, to continue raising ‘fourth child’

(Bloomberg) – The personal care brand Honest Co. rose 44% on its commercial debut. She delivered what co-founder Jessica Alba called the “Pinch Me Moment” and increased her platform for healthy product pitching. The actress became an entrepreneur, she said she had no plans to step down after Honest went public. “I have three children, I would say Honest is my fourth child,” Alba said in an interview. “You should have products that you can trust and across the board we hit all the things that are very important not just to millennials, but also to the younger generation, who really lead consumer behavior to a more conscious life.” Company shares that sold for $ 16 when it went public closed at $ 23 in New York trading on Wednesday, giving the company a market value of approximately $ 2.1 billion. The company is fully diluted and includes employee stock options and restricted stock units. It is valued at around $ 2.5 billion. Honest and its existing shareholders raised $ 413 million in the stock sale Tuesday. The company offered 6.5 million shares, with more than 19 million shares sold by investors, including private equity firm L Catterton, Institutional Venture Partners, Lightspeed Venture Partners, and General Catalyst. “The vision and mission of the company came 100% from Jessica,” said Eric Liaw, General Partner at IVP and Board Member at Honest. “Without her we wouldn’t be here.” Honest received merger interest from special purpose vehicles, or SPACs, but “just decided it probably wasn’t right for us,” Liaw said. The long-debated IPO was made possible in part because the company had become profitable, he said. Albas StakeAlba, despite resigning as CEO, remains a director and is also the company’s chief creative officer. It owns 5.65 million shares, including options, and has no intention of selling its shares in the offering, according to filings with the Securities and Exchange Commission. In a letter to potential investors in the company’s filing, Alba pointed out Honest’s commitment to health products. In addition to baby products like shampoos, the company also sells cosmetics and detergents, a collection that was launched during the coronavirus pandemic. Alba, who has appeared in films such as Fantastic Four, attributed her interest in healthy products to her own childhood ailments: “I suffered from chronic illnesses, severe asthma and allergies, which resulted in long, lonely weeks in the hospital,” she said . “There were no permanent solutions to my health problems, and when I was 10 years old I realized how wellness can shape your entire life. That never left me. “Target, founded in 2011 by Amazon, Honest has grown into a national brand and has partnerships with retail giants such as Target Corp. and Amazon.com Inc. Alba said it was particularly concerned about ingredients in baby products and that it was trying to appeal to lawmakers to reform chemical legislation. Honest’s business touches on several trends that have gained prominence during the coronavirus pandemic, including a focus on wellness and increased demand for cleaning products. These have contributed to top-line results for homeware companies like Procter & Gamble Co., the maker of Pampers diapers and Tide laundry detergents. Based in Honest, Los Angeles, Honest had sales of approximately $ 301 million last year, up 28% in 2019. In 2020, it lost $ 14.5 million. Diapers and towels accounted for 63% of the previous year’s sales. Honest is focused on building its brands rather than acquiring new ones, CEO Nick Vlahos said in an interview with Alba: “If so, from the standpoint of ability to look at something, we would consider that,” said Vlahos. “But in order to turn around and try to put multiple brands in one portfolio, we’re not strategically focusing on that.” Vlahos said he sees potential growth distortions that will lower birth rates in the United States. Honest appeals to the 3.7 million to 4 million Millennials and Generation Z who become mothers every year, he said: “They value sustainability and social responsibility,” he said. “And we’re at the right place at this sweet spot when it comes to this consumer segment.” More than 34% of the new customers on the company’s website were in the skin and personal care sector, making these categories promising growth areas, Vlahos said. P&G recognizes that rising costs put pressure on results. Toilet paper maker Kimberly-Clark Corp. recently lowered its earnings forecast and Clorox Co. missed Wall Street estimates for quarterly sales last week. In addition to the shift in demand, manufacturers are struggling with higher raw material and freight costs. Honest said in the filing that they are working to manage disruptions in their supply chain but expects “ongoing market turmoil” as a result of the pandemic and its economic impact. “If the disruption caused by the Covid-19 pandemic continues for an extended period of time, our ability to meet the needs of our consumers can be severely affected.” The company’s offer was made by Morgan Stanley, JPMorgan Chase & Co. and Jefferies Headed Financial Group Inc. Its shares trade on the Nasdaq Global Select Market under the symbol HNST. Alba compared going public and future plans for Honest to becoming a mother. “You have put so much into your birth plan and essentially, when you are the mother and you have the children, then you, especially me after three, understand that the real work is raising these children,” she said in the interview. “Then really start and this is how I feel today.” (Updates with closing price in fourth paragraph) For more articles like this, visit bloomberg.com. Subscribe us now for the most trusted business news source. © 2021 Bloomberg LP