Yahoo Finance

Consumer goods brand, the Honest company beating expectations in its fourth quarter and reaching a record annual revenue of $378 million in 2024. That's up 10% year over year and the company issuing guidance that it says takes into account the potential risks of tariffs. Investors are eyeing the impact these policies could have on consumer names and pricing for customers joining me now on this. We've got Carla Vernon, who is the CEO of The Honest Company. Carla, great to have you back on the program with us and thanks for taking the time here. You know, as we're just monitoring the stock reaction to the earnings, just got to ask, even as you're looking out into the future, of course, investors focused on what's going to happen in the future for the company. How are you really factoring in the impact of some of the potential policy decisions that could come forward?

Thank you so much, Brad. It's really great to be here with you this morning, and I have been enjoying this series that you are doing on Yahoo Finance. So thanks for having me. We reported our earnings yesterday from The Honest Company and across the board, we did beat expectations and beat consensus. I'm very proud of the record revenue results and the margin expansion that people are seeing from The Honest Company. As we gave our outlook, we did reflect what we knew and what we were able to plan for in tariffs. And I would say overall, our expectations for The Honest Company remain strong and confident. We indicated that we have our long-range model set to grow at 4 to 6% on the top line and margin expansion on the bottom line, and that remains our point of view. We're very confident about our ability to do that.

I wonder what you're hearing from your retail partners right now in the pulse check of the consumer, especially as it relates to all of the items that make their way into shelves at some of those largest wholesale purchasers that you work with.

We have such strong relationships with our retail partners. The Honest Company plays such a strong role both in brick and mortar stores and online because we really attract a very new and important demographic to the aisles that we play in. So many people might not be aware, but Honest Company makes clean designed personal care items that are designed for babies. And now we've expanded into families of all sizes and all ages with products across the board from diapers and baby wipes to personal care for adults, including gorgeous skincare products. And when we talk to our retailers, what we're finding is that they value what Honest brings by attracting that upper income household to the categories. And they see that we are driving growth in the categories where we play. In fact, across the board at our top retailers, whether that's Amazon, Target, Walmart, we've seen growth in consumption across all of 2024 and even our fourth quarter results.

Carla, while we have you, tomorrow is a critical event for retail as well here, as we know that Target and some of the backlash to rolling back their diversity and equity and inclusion initiatives. There are customers that are saying they are going to blackout basically their purchases from some of the retail organizations that have made these decisions. We know that you have partnerships with stores like Target. How do you kind of monitor when there are major events where consumers, as Marcus Collins told us yesterday, have more empowering agency with their dollars to make sure that you're still kind of monitoring what's playing out with the consumer and how that agency also flows through to aisles that you're in as well.

The Honest Company was founded by four founders who themselves were diverse, including a Latina founder, an Asian founder. I myself am an Afro Latina female CEO. So at The Honest Company, the importance of including everybody who might want and need our products is just absolutely woven into our DNA. I grew up, I was trained at one of the world's greatest and biggest CPG companies. And one of the things I learned when I grew up at inside of General Mills and when I was running the Everyday Essentials business at Amazon is that demographics are destiny, and consumer products companies need to have a big wide open tent to attract everyone. To do that, we have to have products that earn that trust. That's what we focus on at Honest. We have products that have a very high standard of clean. We call it the Honest Standard. And we there are 3500 ingredients we do not use or allow in our products because we want people to know these products are different on the shelf. They are high quality, they are effective, and they are good for everyone. I love when I see the five-star ratings across the board for our products. That means we are actually satisfying people across the board. And our retailers look for us to do that, to bring everyone into the aisle and drive those sales.

Carla, just lastly while we have you, I'm going to I only have about 30 seconds here, but you know, I I love the history, the work history, the experience you bring to The Honest Company, just the leadership lessons. And and you sent some leadership lessons to our team, especially as we're considering this critical moment for diverse voices and positions leading large businesses, publicly traded like The Honest Company.

Listen, my message to all my employees and everyone right now is do a personal inventory. Make sure every day you are making space for gratitude, for joy, and for rest, because that will serve you in these times and in any times.

Carla, thanks so much for taking the time here out of your busy schedule. Really appreciate it as always.

Thank you, Brad.