The Honest Company tapped corporate finance veteran Dave Loretta to take over as its CFO, the consumer products manufacturer said Tuesday.
Effective Sept. 25, Loretta will replace Kelly Kennedy, who is stepping down after two and a half years at the finance helm of Honest, where she helped lead the company’s initial public offering, according to a press release.
Loretta brings more than 25 years of experience to his new role, most recently serving as CFO of clothing retailer Duluth Trading. He also previously held roles at Nordstrom and RH.
Founded by actress Jessica Alba and based in Los Angeles, California, Honest describes itself as a business dedicated to creating “clean- and sustainably-designed” consumer products spanning across a range of areas, including baby care, wellness and household care. It went public in 2021.
The announcement comes as Honest struggles with growth and profitability. In March, the company reported that its fourth-quarter fiscal 2022 revenue increased by 2% year over year to $81.9 million, while gross margin decreased from 30% to 27.5% in part due to higher fulfillment and product costs.
“We are not satisfied with the revenue and margin results announced today,” CEO Carla Vernón said in a statement at the time. “We do not believe they reflect the strength and potential of the Honest brand. In 2023, we will be relentlessly focused on taking actions and defining a strategy to set us up to be a stronger, more profitable Company in 2024 and beyond.”
During an earnings call at the time, Kennedy said the company planned to enact “mid to high single-digit price increases” in the second half of 2023 across product categories. This came on top of price hikes in 2022.
Last month, Vernón reaffirmed Honest’s commitment to expanding its profit margins as the company reported a gross margin of 27.1% for the second quarter of its fiscal 2023 compared with 30% a year earlier.
As the company’s new CFO, Loretta will work with Honest’s executive leadership team to help it continue executing its “Transformation Initiative,” focused on brand maximization, margin enhancement and operating discipline, the company said in its Tuesday release.
“As a seasoned public-company CFO with an entrepreneurial spirit, Dave will make a strong addition to our team as we continue scaling Honest to become a larger, more vibrant, and more widely available brand than it is today,” Vernón said in the release.
Loretta will receive a base salary of $475,000 per year and be eligible for an annual discretionary bonus with a target amount of 70% of his base salary based on the achievement of objectives and milestones, according to a Securities and Exchange Commission filing by Honest.
Kennedy has agreed to remain employed at the company through Dec. 31 as consultant to ensure an orderly transition, the filing said.
Loretta joined Duluth Trading in 2017, two years after its IPO, and has since helped grow the business from $400 million in revenue to $700 million, the release said.