S&P slashes Olaplex

S&P said it downgraded Olaplex Inc.’s senior secured term loan to B- from BB- and revised the recovery rating to 3 (50%-70%, rounded estimate: 50%) from 2 (70%-90%, rounded estimate: 70%). The agency also lowered the issuer rating to B- from B+.

“The downgrade reflects material demand deterioration for Olaplex's products driven by negative media attention around the efficacy and safety of its products, new competition, retailer inventory destocking, and weak macroeconomic conditions. For the six months ended June 30, 2023, Olaplex's revenue and S&P Global Ratings-adjusted EBITDA declined by 44% and 67%, respectively.

“Additionally, the company revised downward its revenue and EBITDA outlook for fiscal year 2023 by about 24% and 42%, respectively, citing material underperformance in the second quarter and weak demand trends obstructing a meaningful recovery in the second half of fiscal 2023,” S&P said in a press release.

The agency said it does expect Olaplex to post positive cash funds from operations though at lower levels than it had previously expected.

The outlook is negative.

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