Q2 2022 Olaplex Holdings Inc Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Good day and thank you for standing by welcome to the older products incorporated second quarter earnings Conference call.
At this time all participants are in a listen only mode. After the speakers' patient there will be a question and answer session.
During the session you will need to press star one one on your telephone. Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today, Allison Malkin of ICR.
You may begin.
Thank you and welcome to the <unk> second quarter fiscal year 2022 earnings call with me today are Julie one Chief Executive Officer, and Eric <unk>, Chief Financial Officer for today's call <unk> will begin with the review.
Our second quarter performance.
Highlight the progress we made on our strategic initiatives.
Then Eric will provide additional details regarding our second quarter.
First half financial results and fiscal 2022 outlook. Following the prepared remarks, the operator will open the call to take the questions you have for us today.
Before we start I would like to remind you that management will make certain statements today, which are forward looking including statements about the outlook of all classes of business and other matters referenced in the company's earnings release issued today.
Each forward looking statement is subject to risks and uncertainties that could cause actual results to differ materially from those projected in.
Or implied by such statements.
Additional information regarding these factors appears under the heading cautionary note regarding forward looking statements in the company's earnings release and in the company's filings that it makes with the Securities and Exchange Commission that are available at Www Dot SEC.
<unk> com and on the Investor Relations section of the company's website at IR dot older class Dot com.
For looking statements on this call speak only as of the original date of this call and we undertake no obligation to update or revise any of these forward looking statements.
Also during this call management will discuss certain non-GAAP financial measures, which management believes can be useful in evaluating the company's performance.
The presentation of non-GAAP financial measures should not be considered in isolation or as a substitute for results prepared in accordance with GAAP you will find additional information regarding these non-GAAP financial measures and a reconciliation of these non-GAAP .
Actual measures to the most directly comparable GAAP measures in the company's earnings release.
Live broadcast of this call is also available on the Investor Relations section of the company's website at IR Dot <unk> Dot com.
I'll now turn the call over to <unk>.
Thank you Allison and good morning, everyone.
We are pleased to speak to you today to share another period of outstanding performance.
Our second quarter results were highlighted by robust sales and profit growth that continued to outpace the overall strength of the U S prestige hair care category and beauty industry capping off a strong first half.
All of that.
Net sales increased by 39% in the second quarter and 47% for the first half of the year.
Once again this growth was broad based across product.
Channels and geographies.
We are affirming the benefit of a mutually reinforcing synergistic.
The China market.
Adjusted EBITDA Rose 20.
Two 6% from the second quarter last year with an adjusted EBITDA margin of 63% for the second quarter 2022.
For the first half of fiscal 2022, adjusted EBITDA grew by 36%.
65% of net sales.
The second quarter of 2022, once our full quarterly reporting as a public company.
With each quarter delivering industry top tier net sales growth.
Profit margin.
This reflects the.
Execution of our strategy.
Strategy.
He lead shape and define the prestige hair care market with site base.
Has been protected products.
Sorry to fixed real health problems from the very first Hugh.
With a compelling strategy, a strong track record and deep competitive advantages.
We believe we are well positioned for future puts us in a very attractive.
Resilient category.
We believe prestige Haircare remains the resilient high growth category with strong long term tailwind.
We continue to see strength in prestige beauty.
Misteach hair care category.
Humans are prioritizing the only wellbeing.
Even during uncertain times.
Which is consistent with how the beauty consumer has asked this in past downturn.
British beauty in the U S. What's the only industry with rising unit.
Year to date across 14th question retail industries tracked by NPD.
<unk> remains well positioned to benefit from this consumer behavior, given our patent protected product portfolio highly efficient and productive innovation model.
<unk> engaged community of Siloed.
Humans.
We are also.
First of all price points within prestige hair care.
Which combined with our product performance offered excellent value to the consumer.
You can see evidence of this as you continue to outpace the category.
According to the NPD group retail tracking data, which exclude salon Ola.
<unk> U S. NPD truck sales were up 54% in Q2 2022 versus Q2 of 2021.
As compared to total U S prestige hair care category sales up 24% during the same period.
We also continue to see a normal level of competitive intensity, which is healthy for a high growth category.
Creator of the bodybuilding category.
Only breath using patent protected <unk> technology to truly repair headlines from the inside out.
We stand to gain the most from growing awareness of the category.
While we do not expect the category to be new for potential pressure related to an economic slowdown. We also believe that current sentiment for the category and older plants remain strong.
Based on our June Ipsos brand Health survey of U S premium health care consumers, we followed that of those respondents who have purchased all the plants in the last 12 months.
It's 5% anticipate greater spend in premium hair care in the next six months versus the last six months.
Compact.
Only 8%.
They would spend less.
The global prestige hair care category remain in the early stages of long term growth and <unk> is playing a leading role in developing this market.
We are excited about our long term initiatives to grow awareness.
<unk> penetration in existing channel growth distribution internationally and expand our portfolio.
Which only consist of protein products today.
<unk> white space for highly incremental future launches.
The second quarter saw us advance on each of these growth initiatives.
Which we believe positions us well for the second half of the year.
To this end.
Our core remains strong.
Adding to our independent brand Health survey.
All key metrics held steady or in.
Proved in Q2 as compared to Q1 of 2022.
With best in class conversion from awareness to purchase intent among other prestige hair care brand Trust.
Our aided awareness increased.
Two points.
And aided awareness jumped approximately five points from first quarter of 2022.
In retail.
MPD all Opex remained the number one prestige hair brands in the U S in Q2.
With seven of the top 10 performing items.
In professional Polk Hans Ola.
For best selling hair care product.
The launch in the U S in Q1 2022.
Seven out of the top 10 performing items.
In DTC.
Amazon U S report.
Three of the top 10 overall health care products in Q2.
We surpassed 1 billion hash tag <unk> views on tick talk in Q2, reaching one 1 billion.
Instagram following rose to approximately $2 3 million with $13 9 million hashtag <unk> user generated poll.
Second.
We continue to introduce highly incremental and best in class innovation.
Number nine bonds building nourishing has two room introduced in Q1.
Hi.
Antique damage has shield.
<unk> position and keep damage.
<unk> body.
<unk> incur memory retention properties none.
Knight continues to be a strong performer in Q2.
<unk> number one status within has two rooms.
<unk> launched at Sephora and was cited.
Best in class hedge Hal launch at Ulta beauty.
In June we launched number for seaborne maintenance clarifying shampoo.
We should reboot hot water and minerals.
Chlorine.
Oil and product built up from the very first use.
Mark our second highly incremental product introduction for the year.
This call refine shampoo launched fill a void.
Portfolio.
Current all of the.
Consumer was previously required to go outside of our brands to serve this need.
Our clarifying shampoo is off to a strong start across the loan.
Online and in specialty retail starting with Sephora.
Third we continue to drive our synergistic Omnichannel model with broad based success.
Our close connection with our community of professionals Salon stylists and consumers.
Right.
Powerful insights, which we aim to capitalize on to create new opportunities for growth.
Does this point.
At the end of the second quarter, we introduced a new offering in our professional channel.
One liter size of our number four shampoo number foresee clarifying shampoo and number five conditioner for used in salon and for sale to consumers choose alone exclusively.
Leader sizes are a standard in the Salon industry and also preferred types with the loss to us at the back Paul but that is generally limited space.
We expect this offering to help increase penetration with news alone in the U S and abroad.
<unk> to raise awareness and trial of our brand.
In retail we continue to build awareness for the brand through our highly successful expansion into Ulta beauty.
<unk> at Kohl's and do glass in Germany.
And in direct to consumer.
And hence our own dot com offering with several new capabilities.
Including the May launch of an upgraded version of our health diagnostics with more personalized recommendation.
Launch of new technologies to drive engagement and conversion like shopper, both video and live streaming and continued expansion of our international digital and Dot com in front.
In our highlights from our pure play E Commerce business.
What's the number one should I care brand by sales on Tmall Cross border and the number 12 on Tmall overall.
The 618 event in China.
Lastly, we continue to prioritize investments to enable our future growth.
We have previously advised.
Hum and will continue to invest ahead of our growth.
We continue to invest in our talent pool.
Growing our employee base.
44% since the start of the year investing.
Investing in our R&D team and infrastructure, where today it represents 10% of our total workforce and expanded our research facility on the Pfizer campus in New York.
We also continue to invest in marketing having brought our CMO on in January and she has and will continue to build out our marketing team to drive all funnels of marketing.
As a result, we have seen our unaided brand awareness increased 21% maintaining our number one E. N V ranking for the head category for the first half of 2022 as tracked by tribe dynamics.
We are one of the fastest growing beauty brands take talk when it comes to engagement and juice. So January the Pope.
We continue to be the number one prestige hair care brands on Instagram with the most followers and the largest and growing user generated content library.
By the end of 2022.
But to begin manufacturing with a new contract manufacturer in Europe to directly supply certain of our core products to that market.
Believe this will help reduce transportation costs.
Shipping time and environmental impact.
We continue our efforts to build further resilience in our supply chain.
And we continue to advance our ESG initiatives.
That's a remote company with no direct supply chain operation.
We have engaged <unk> to help us evaluate the sustainability practices of our suppliers and contract manufacturers.
<unk> us to drive transparency and continuous improvement.
ESG practices.
As we approach the one year Mark a full class being a public company. We are pleased to see our passion and dedication pay off with our consistent industry, leading performance, we have experienced through the second quarter.
And we truly believe that we remain in the early innings of our growth, we see tremendous future potential for science based beauty solution.
Through our investments.
We are building the capabilities and infrastructure across our organization to enable this growth opportunities.
We are grateful to our team and our community of stylists and ambassadors and we continue to be excited about the incredible opportunities that lie ahead for all of that.
And now I would like to turn the call over to Eric to review, our financials and guidance in more detail.
Thank you Joey and good morning, everyone.
We believe our strong Q2 performance is a testament to the attractiveness of the prestige hair care category.
Moving strategy and the stellar execution capabilities of our team.
As we look ahead, we are reaffirming our fiscal year 2022 guidance range, which remains top tier in our industry.
In Q2, 2022, net sales increased 38, 6% to $210 9 million.
<unk> once again by broad based growth across channels geographies and products.
I will note that Q2 net sales included approximately $10 million in shipments that we believe were made in advance of the price increase implemented on July one.
Excluding the $10 million in shipments our Q2 net sales were in line with our original expectations for the quarter.
By geography, the U S led our growth with a 41, 3% increase broad based strength across channels.
International sales were also strong rising 35, 2% with strong contributions from Italy, Germany, France.
Canada, and our emerging cross border E Commerce business in China.
By channel professional sales grew 32, 7% increasing to $105 $5 million.
Judy mentioned this was aided by the long planned launch of our new one liter offerings with those launched shipments happening in Q2 for the U S.
Specialty retail sales increased 68, 5% to $64 $2 million aided.
Aided by incremental distribution since the year ago quarter, particularly and also as well as from Sephora at Kohl's and for Europe .
Direct to consumer sales rose 19, 3% to $41 $2 million.
This level of growth was consistent with our expectation as we noted on our Q1 call that we were seeing the trend of more consumers shopping in physical retail and into loans, which we can continue to capture due to the strength of our Omnichannel model.
Moving down the income statement.
Adjusted gross profit margin was 75, 2% declining 550 basis points from 87%.
Q2 2021.
Contraction in gross margin rate was driven by logistics and input cost headwinds, which drove 330 basis points of the decline.
Product and channel mix accounting for the remainder.
That mix impacts included the pipeline fill of our one liter size offering.
One liter carries a higher margin than the two liter overall mix shift to professional caused by the selling lowered our overall gross margin.
We expect the introduction of the one leader to be highly incremental to sales over time as it is often the preferred solution for the professional community, making this a strong ROI and part of our plan to build awareness and increase penetration of salons worldwide.
We expect gross margin to improve in half two 2022 versus Q2 2022 as a result of the approximately five 5% average price increase taken on July one.
As well as from the moderation in logistics and input cost pressures that we're seeing versus earlier in the year.
Adjusted SG&A increased 42, 1% to $24 4 million from $17 2 million in Q2 2021.
The $7 2 million increase in adjusted SG&A from prior year reflects investments made to support the long term growth of our business, including <unk>.
$2 4 million increase in sales and marketing expense.
$2 4 million increase in workforce expansion.
A $1 9 million increase in public company costs.
And a <unk> 5 million increase in distribution and fulfillment costs related to the increase in product sales volume.
Adjusted EBITDA grew 26, 2% to $133 1 million.
Adjusted EBITDA of $105 5 million in the 2021 second quarter.
Adjusted EBITDA margin was 63, 1% compared to adjusted EBITDA margin.
69, 3% in the 2021 second quarter.
Adjusted net income increased 35, 5% year over year to 98.8.
$8 million.
Or <unk> 14 per diluted share.
From $72 9 million or <unk> 11 per diluted share in the 2021 second quarter.
Adjusted net income benefited from lower interest expense year over year, resulting from our first quarter debt pay down and refinance.
Now turning to the balance sheet.
Inventory at the end of Q2 2022 with $143 million.
Compared to $98 4 million at year end, 2021, and $117 $5 million at the end of Q1 2022.
We have strategically maintained a higher level of inventory months on hand.
The growth in our business Comped.
Compensate for longer transit times overseas and to help mitigate macro supply chain risks.
We remain comfortable with our inventory position and our ability to meet future demand.
Turning to cash flow, we once again generated strong cash from operations of $128 million and.
<unk> ended the quarter with $198 million in cash and equivalents.
Long term debt net of current portion of deferred fees was $657 million.
Now turning to our outlook, we are reaffirming our fiscal year 2022 guidance for.
Net sales of 796.
$826 million, an increase of 36% at the midpoint.
Adjusted EBITDA in the range of $504 million to $526 million, an increase of 26% at the midpoint.
And <unk>.
Adjusted net income in the range of $363 million to $379 million, an increase of 35% at the midpoint.
We would also like to provide the following comments related to guidance.
The fiscal year 2022 guidance range implies a hack to net sales growth range, plus 22% to plus 31% as.
As we anniversary tougher comps from 2021, new product launches in the pipeline inventory, we shipped to answer in Q4 2021.
The approximately plus five 5% average price increase we implemented at the start of the third quarter was contemplated in our reaffirmation of guidance that was provided during our first quarter earnings call in May.
In addition, as I mentioned Q2 included a sales benefit of approximately $10 million from orders placed in advance of the price increase which we believe would've typically occurred in Q3.
This impact was primarily in our professional channel.
Finally, given the impact of current interest rates on our floating rate debt. We currently expect interest expense to be approximately $42 million for the year up from our previous expectation of $40 million.
In summary.
Second quarter represented another excellent performance.
We are operating in a resilient high growth category.
We have a proven strategy.
Strong track record of execution and significant growth opportunities in front of us.
And finally, we remain confident in our outlook and believe the best is yet to come for a low plex.
This concludes our prepared remarks, we will now turn the call back over to the operator for questions.
Operator.
Certainly as a reminder to ask a question you will need to press star one one on your telephone please limit yourself to one question and a follow up please rejoin the queue for additional questions. Please standby, while we compile the Q&A roster.
And our first question will come from Dara <unk> of Morgan Stanley Your.
Your line is open.
Hey, good morning, guys.
Good morning.
So.
Just given the state of the consumer is more in question here with macro pressures can you give us an update on revenue growth trends sequentially towards the end of Q2 on an underlying basis, so stripping out the impact of the timing shifts with pricing.
More on an underlying basis, and perhaps revenue trends so far in Q3.
And just in general and update on how you think about the potential for weaker consumer spending in general to impact prestige hair care in your business specifically now that we have three months of additional information on the consumer here relative to your comments on the Q1 call.
<unk>.
Yes.
Thanks Dara.
I'll take that first part of the question on the trends we saw in sales through the second quarter.
And then Joey I think you wanted to take.
There is other questions.
On the sales trends through the second quarter.
Backing out the.
$10 million that we referenced related to the price increase we saw consistent strength across channels throughout the quarter. So nothing really to remark on there.
Right and then on your question on the consumer sentiment the beauty resilience I mean, you've heard us say.
Prepared remarks that while the categories of prestige had grew at 24% in Q2 prototypes.
54% during that same time period.
We are also seeing NPD reporting that prestige beauty was the only industry with rising unit sales and detractors across 14 discretionary retail industry. So it is pretty impressive to see the beauty held on and held on very well and one data point that was also in the NPD report bless that.
Household income funding more than $100000.
It's actually now 47% of the beauty shopper base and if you look at that that's an increase of about three share points in 2020 versus five share points over 2019.
And we feel like all of this really drives home the point that consumers will prioritize their own wellbeing because primarily what is happening is beauty is that little luxury that can help them feel better about themselves.
Okay, great. Thanks.
Thank you.
Yeah.
And our next question.
Will come from Andrea Teixeira of Jpmorgan. Your line is open.
Thank you good morning.
Wondering if you can give us an idea of.
Specialty retail like for like as you extrapolate.
The.
Obviously, the new distribution and also related to that I think you Eric you called out negative mix impact of having.
Growth in professional or this quarter. So I guess one of the things that I've been getting feedback from the buy side is that margin obviously it came in soft as.
Can you parse out like the price increases in July five, 5% and then normalizing with seasonality.
Having that build through should we expect margins to recover.
And then I'll have a follow up question on the top line. Thank you.
Thanks, Andrea I'll take that second part of the question.
First which is around gross margin and <unk>.
Youre absolutely right so last quarter on our call we talked about the fact that we're seeing worsening cost inflation as well as <unk>.
Our mixed impacts that we're expecting in the second quarter and the gross margin in the second quarter would be lower than the first that's exactly what you've seen play out here. We also talked about the fact that we were taking mitigating actions to offset that and gave us the ability to reaffirm our fiscal year profit guidance and Thats all.
Also exactly what's playing out here. So the combination of the average five 5% price increase that we took in July .
The moderation of input cost inflation that we're seeing in the back half of the year versus the first half of the year part of that is market driven part of that is also our own actions with our suppliers.
And lastly, part of it is just that normalization of mix, we do expect gross margin in the back half to be improved versus what we saw in the second quarter still pressured versus last year, but improved versus the second quarter.
And all.
Consistent with our reaffirmation of fiscal year, EBITDA guidance, and net income guidance as well.
And is that right.
Yeah go ahead, Julien and specialty retail.
Yes, I was just going to answer your question on.
Regarding distribution I mean, if you saw what we presented in Q1, we advised that we've just gotten into the food distribution with Altra also 200 doors, both the loss and retail.
It is performing better than expected, 25% of services at Epsilon used all the plants.
I'll now in full fleet in Sephora, which is close to or up to 800 doors, where we are actually kind of leading and defining and shaping that prestige hair category for support in Europe .
We just launched as you have heard from US in Q1, again 200 doors to cloud and we are maintaining our number two headwinds status. So all of this just means that we want to continue to be bigger and better in terms of how we approach distribution and how we partner up because if we are the number one hair care brand and then move onto the <unk>.
Top five and 10 beauty brands, we do believe that this will continue to bode well for us in terms of partnership and we are confident that as we continue to do this we will see material growth.
Two our omnichannel.
Regardless of how the consumers decide to shift or move from one channel to the next.
And it turns out that's helpful Joey but in terms of like how.
Historically have you.
You've seen any cannibalization.
The existing stores as they rollout in some of our Thursday, So more sephora is within.
Within the same geography or always true.
The awareness to the brand.
On a like for like so is that a same.
Same store sales basis.
Yeah. That's a good question. So if you look at the NPD Q2 reporting that we just ship it does show that while the category over all channels other than salons, because MTBE does not report so long distributions. So it is.
So PD Q2 reporting that we just ship it does show that while the category over all channels other than salons, because NPD does not report so long distributions. So it is specialty retail it is DTC.
Overall prestige hair care category grew 24% and we grew 54%. Therefore, you can tell the ultimately what it means is that our growth is sustainable and therefore, our distribution. It's also very complementary.
Thank you very much I'll pass it on.
Thank you and our next question will come from Lauren Lieberman of Barclays.
And Lauren.
Your line the growth in the U S. This quarter.
Obviously very strong.
Of percentage growth year over year, but in terms of dollars the business looked like it was flat sequentially with the first quarter. So just really wondering how we should be thinking about kind of phasing of growth in the U S.
To see some slowdown in Sephora and Ulta has been as you just said ahead of plan.
And so far also bring in other brands in prestige hair care. So curious if obviously like the aggregate picture of U S performance sequentially and how to think about growth.
Yes, Hi, Laurent I'll take that so.
So really happy with our growth in the U S up 41% in the second quarter I understand what youre, saying that the absolute dollars were pretty constant from Q1 to Q2.
But we expect the U S and international to continue growing in a balanced way. So we're what we're seeing is broad based growth.
And you all know that in our long term growth strategy, we see even more white space.
And opportunities internationally, so over the longer arc, we expect international too.
To grow very nicely for us while we continue to grow in the U S. We expect it to remain balanced.
Okay, and then and then I was just curious if you think about the international rollout.
In Europe Western Europe is a big part of this story and royalties certainly longer term.
But as we're dealing with this real dramatic pinch on consumer wallets does that impact at all your decision on the pace with which to move internationally.
Are you seeing any sort of maybe it's still early but buying patterns for consumers in a market like western Europe , where maybe they're buying at a one or two elements of the regimen for example, like not using a shampoo and conditioner, but using the the mask.
Just curious how the consumer environment may be impacting your approach to that international rollout at least over the next.
Couple of quarters or whatever it may be.
I'll take that question, yes, I mean, one of the things that we do know is that we have just started really rolling out into what we call larger chain stores because up until then we will in professional has prolonged establishing our credibility and authority and as you saw.
When you started rolling before Europe and to glass.
And now you're hitting that category. So what we are doing is that we are doing exactly what we have done in the U S that same playbook.
Want to get deeper with each of our trade partners our retail partners.
We can help but programming and initiatives and merchandising to really helped us.
Consumers to understand exactly what the regimen or what products could be doing for them.
If you look at what is happening is anytime, but all the pipes get into a market. The prestige had category gets more awareness and when that happens. The category also growth. So we feel very confident that given all authority that we have established with pro now that you know retail is expanding distribution.
Not in a pace that we have no control over we feel like that message and awareness will continue to accelerate and when that happens. It will work very well with how we continue to educate and merchandise and partner with those retailers.
That makes a ton of sense and I'm, sorry, if I can sneak in one more Erik I did notice the inventory levels was higher.
We've seen that with a lot of companies this quarter, just given given inflation, but I was just curious if youre happy with the level of inflation excuse me of inventory.
If that's related to kind of product rollout timing or how we should think about that if self growth kind of flows from here just given the macro.
Yes, absolutely.
We're happy with the level and quality of the inventory we have on hand, it's been been a big part of our strategy to maintain excellent customer service, which we've been able to do over the past several years.
And that means we made a strategic decision to hold more months on hand of inventory, we made that decision way back in the middle of last year. It served us very well that's exactly what we're continuing to do here.
In that month on hand level of inventory remains pretty stable.
Okay, great. Thanks, I'll pass it on I appreciate it.
Thank you and our next question will come from Jason English of Goldman Sachs.
I just want ma'am your line is.
So I heard you loud and clear on the $10 million pipeline fill our pipeline fill buying ahead of price increase in pro but you also mentioned a pipeline fill for the one liter product was that also a transitory boost to professional sales this quarter and should we also expect a bit of an overhang.
As that channel looks to run through that inventory in the third or fourth quarter.
Hi, Jason Yes, there was some additional pipeline related to the one liter offering and pro in the U S and yes for those two reasons you might expect to see.
Quarterly phasing for professional will be a little bit lighter in the third quarter and then better in the fourth quarter for those specific reasons.
Note, though.
Even without those impacts we're seeing good momentum and strength in our professional business globally and in the U S.
Down a little bit of a lag, but we monitor client data here to watch what's happening with the category in our own business and we continue to outpace the category handsomely in terms of our sales growth in U S pro versus the total market.
That's encouraging and do you think thats, because youre, gaining more distribution or is it just sell through or attach rate within the salons, where you already exist.
Both absolutely both so we're continuing to increase penetration that's a big part of the strategy behind this one liter offering as well as getting into new stylus hands and into new salons, but per usual. We're also seeing those stylists that have adopted the brands in your two year three.
Continuing to increase their purchase rate as well, so a little bit of both.
Very encouraging and like Laura and I will try to squeeze in with third one real quick.
So she referenced sequential growth or lack of sequential growth in U S retail.
We also saw a sequential dip despite prime day coming in June and six to 18 arguably be and it sounds like a much bigger event for you this year than last.
Did you ship that in the prior quarter is that why we see a sequential dip or.
Is there something else offsetting what I would think would be sequential growth from both of those events.
No the direct to consumer sales and growth of 19% growth. We had in the second quarter was consistent with our expectation and and really the signal that we send on our last call, which was this consumer behavior shifting to <unk>.
Physical retail and salons.
Any sell in for Prime day was included in the quarter I'll, just remind you that our business in cross border ecommerce, while emerging really exciting remains pretty small in the grand scheme of things.
Yes, it makes sense. Thanks, a lot I'll pass it on.
Thank you.
And our next question will come from Karen Wolf Meyer of Piper Sandler.
Hi, good morning.
Good morning, Thanks for taking the question so kind of a follow up on that last one on some of those big selling event you saw.
More recently on Amazon and Nordstrom I'm curious generally how did those go and what kind of insights where you're able to gather from those events, whether what was that from reaction.
Are you seeing or some of the kids you offer just any color there would be helpful. Thanks.
Thanks, Karen I'll take that question so on the whether its an Austrian whether it's Amazon what we do is we do it very strategically and as you are aware we have.
In traditional not participate in Amazon Prime but we also have started this year to look at Amazon advertising and because it was such a tight process, where we can actually say all things being equal we did.
Amazon advertising, if you ran a prime programming that was very small we wanted to see whether the advertising really had any impact and the insight on that was that was.
Solid impact that will increase the various purchase reviews, which was very important in the scheme of our ranking from our consumers and because of the insight. We now have an opportunity to say do we want to do more advertising with Amazon.
That was the reason why we looked at the Amazon initiative when it comes to Nordstrom Act.
Activation vib activation with Sephora. This are consistent with our strategy of years past and we will continue to discuss during market weeks and meetings with those retailers to see what makes most sense. So that we serve our customers at the end of it.
But these one to get some dose retailers, specifically with solo practice model.
Helpful. Thank you and then can you just expand more on.
The reaction consumer reaction to the pricing increase have you seen any sort of impact to demand from that or has it been pretty well received and then on the offering.
We've seen a lot more kits be offered amongst the retailers recently can you just talk about your strategy.
I pointed out.
I expect to see a lot more going forward.
Yeah, Great question, Karen, let me start with a price increase.
We are confident that our price increase.
At the right time and at the right price point, primarily because an entry level prestige.
Brand plus the fact that we don't do anything without making sure that we run the analysis and also do the research and in this case, we actually with our transformation team conducted an independent market research, which supports that our products actually quick command, even a higher price, but we took the pricing on the <unk>.
Knowing that we wanted to maintain to entry level price point and then while it's early days, we are not seeing any pushback insight, we have retailers who come to us they would collapse that we did it. So that's the first point on your question on kit.
I can't speak for everyone else, but an hour and every kit that we put out has a purpose whether it's for trial and then for consumers to buy into the full line of whether is it anniversary kit or holiday kit that will anniversary. So.
We don't just put up kit, because we want to only.
Need to we put them out because it serves a purpose to acquire new customers and then to eventually convert them.
Thank you.
I would now like to turn the conference back to Julie Wang CEO for closing remarks.
Well. Thank you everyone is exciting to have a full quarter reporting with all of you.
Thanks for your participation. Thanks for the questions and we look forward to seeing you at the next earnings call. Thank you you may now disconnect.
Let's call. Thank you for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
The conference will begin shortly to raise your hand during Q&A you can dial one one.
[music].
Okay.
Okay.
[music].