The Honest Company, Inc. (HNST) is to begin trading on the Nasdaq on Wednesday as it eyes a US$413mln IPO.
It would value the loss-making company, founded by Jessica Alba in 2011, at US$1.4bn.
It had a US$1.7bn valuation in 2015 but it later suffered reputational damage over claims that it was only using natural ingredients.
Four years ago, the baby and beauty products retailer recalled baby wipes because of mould in some packages and baby powder for potential skin or eye infections.
“After our launch in 2012, there was an overwhelming immediate response and growth in the years that followed,” Alba, whose 6.1% stake is valued at US$90mln, said in the prospectus.
“Several years after our launch, however, I was facing another honest moment. Our rapid growth was compromising key business functions and we were outgrowing our infrastructure.”
However, the prospectus admits “health and safety incidents or advertising inaccuracies or product mislabelling” are a risk to business, exposing it to “lawsuits, product recalls or regulatory enforcement actions”.
Losses came in at US$14mln from US$31mln in 2019, while sales rose 21% to US$300mln back to 2016 levels as consumers turned to cleaning and lifestyle products during the pandemic.