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United States securities and exchange commission logo
April 6, 2021
Nikolaos Vlahos
Chief Executive Officer
Honest Company, Inc.
12130 Millennium Drive, #500
Los Angeles, CA 90094
Re: Honest Company,
Inc.
Amendment No. 1 to
Draft Registration
Statement on Form S-1
Submitted March 16,
2021
CIK No. 0001530979
Dear Mr. Vlahos:
We have reviewed your amended draft registration statement and
have the following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Amendment No. 1 to Draft Registration Statement Submitted March 16, 2021
Prospectus Summary
Overview: The Honest Difference, page 1
1. We note your response
to our prior comment 6, including that "[t]he carbon offsets, which
is an immaterial dollar
amount, have been purchased on behalf of the Company, at no cost
to the Company." Please
confirm whether you have analyzed this transaction under Item
404(a) of Regulation
S-K and, if appropriate, please update your disclosure as necessary.
Nikolaos Vlahos
FirstName LastNameNikolaos Vlahos
Honest Company, Inc.
Comapany
April NameHonest Company, Inc.
6, 2021
April 26, 2021 Page 2
Page
FirstName LastName
Our Strengths
Mission-Driven Brand Inspiring Deep Consumer Affinity Across Categories, page 4
2. We note your response to our prior comment 10. Please amend your
disclosure to include
the number of competitor brands included in each survey and revise the
chart on pages 4
and 94 to include legible footnotes.
Business
Overview: The Honest Difference, page 91
3. We note your response to our prior comment 2, but believe that your
disclosure continues
to suggest that you have disrupted multiple consumer product
categories. Please revise to
remove this implication. To the extent that you continue to discuss
disruption, please
make clear that this is a strategy.
Continued Execution of Omnichannel Strategy..., page 95
4. We note your revisions in response to our prior comment 15. Please
clarify what it means
that you have approximately 40% ACV, including the particular market
or geography you
are using to calculate ACV and the relevant time period for the
calculation, and whether
the 40% ACV applies to each of the Diapers and Wipes and Skin and
Personal Care
categories. Please also tell us why you believe that enhancing
distribution with existing
retailers, winning shelf space and increasing the number of products
you sell at each
retailer will increase ACV, as it appears that ACV will only increase
if you expand to sell
in new retail locations, as a retail location is counted as having
sold the product if at least
one unit of your product was scanned for sale within the relative time
period. Please also
clarify whether the reference to "average basket size" in your
statement comparing an
Honest consumer and a Target consumer is referencing the overall
dollar value of the
consumer transaction. Please also tell us why you believe this is a
useful comparison
given that an Honest consumer would buy only Honest products whereas a
Target
consumer could purchase numerous different types of products from
different brands.
Our Products, page 100
5. We note your response to our prior comment 16 and we reissue it. We
note your claim
that the materials in your diapers "differentiate them from over 90%
of diapers produced
by competitors in the marketplace, by volume." Please revise your
disclosure to provide
additional support for this statement, including whether this claim is
based on one of the
materials used in your diapers, multiple materials, or all the
materials. Please also revise
your disclosure to include how you define competitors in this context
and how many
competitors this includes.
Nikolaos Vlahos
FirstName LastNameNikolaos Vlahos
Honest Company, Inc.
Comapany
April NameHonest Company, Inc.
6, 2021
April 36, 2021 Page 3
Page
FirstName LastName
Index to Consolidated Financial Statements
Notes to Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies
Segment Reporting and Geographic Information , page F-7
6. We note your response to our prior comment 19 that the CODM does not
regularly review
the operating results of product categories to assess performance and
make resource
allocations. However, we note your statement on page 72 that [w]e
narrowed our focus
while investing in sought-after, higher-margin categories where we
have differentiated
positioning, such as Skin and Personal Care. Based on this
statement, it appears that not
only are products results reviewed and assessed for performance, but
that resource
allocation decisions are made at the product category level. We
further note on page 75
that [o]ur category mix is a driver of our financial performance
given each category s
different margin profile. Even though our growth strategy aims to
boost sales across all
categories we intend to continue to prioritize our investments in Skin
and Personal Care.
Based on this statement, it appears that you intend to continue to
review and assess results
of product categories and make resource allocation decisions at the
product category
level. Accordingly, please explain to us in further detail why you
believe the CODM does
not regularly review the operating results of these product categories
to assess
performance and make resource allocations.
Note 3. Revenues, page F-20
7. We note your response to our prior comment 22 that you have not
recognized any royalty
revenue for the years ended December 31, 2019 and 2020 from your 2019
licensing
agreement with Butterblu. We also note from your website, which links
to the
honestbabyclothing.com website, that there is a large selection of
products available for
sale. Accordingly, please explain to us why no amounts have been
earned or recognized.
You may contact Aamira Chaudhry at (202) 551-3389 or Theresa Brillant
at (202) 551-
3307 if you have questions regarding comments on the financial statements and
related
matters. Please contact Cara Wirth at (202) 551-7127 or Erin Jaskot at (202)
551-3442 with any
other questions.
Sincerely,
Division of
Corporation Finance
Office of Trade
& Services
cc: Nicole Brookshire