What are Honest Co.’s gross margins (and some rules of thumb for figuring this out)




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This is a Quora questions I was asked.  Here is my answer

I did a quick search in my industry source and did not find anything that specific.

Here are some quick metrics to make a guess:

  • As of 2016, they are north of $300 mm in sales;
  • Unprofitable;
  • Raised $220 mm to date from 10-investors;
  • Direct-to-consumer sales and no retail to date.

Based on the type of marketing they are doing (all brand, from what I can tell), I assume their marketing costs are running at least 25% of revenue, and operations costs at 40% (based on their size).

That leaves 35%, and if they are not profitable, then I assume their COGS is at least 35%.

Given that they sell organic products, I would peg their COGS at 40%, so gross margin is 60%.

In my experience, I have not see pure organic companies with COGS below 40%.

2017-06-11T19:44:42+00:00 By |Categories: Finance|Tags: , , , , |0 Comments

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