Olaplex (US:OLPX) shares took a more than 50% haircut after the salon products firm trimmed its full year revenue outlook by more than 10%, and several analysts downgraded the shares.

The company’s shares fell 51% to $4.78 after it said it expects fiscal 2022 sales of $704 to $711, versus the previous $796 million to $826 million, citing factors including macroeconomic pressures and increased competitive activity, including discounts.

Bank of America downgraded the shares to “underperform” from “buy” and slashed its price to $ from $15. JP Morgan cut its rating to “underweight” from “overweight” and halved its price target to $8 from $16. 

Raymond James bucks the trend, kept its “strong buy” rating intact and cut its price target to $15 from $20.

“By geography, we expect the U.S. to decline 4% and international to increase 28%,” Chief Financial Officer Eric Tiziani said in a late Tuesday conference call with analysts. He said weakening U.S. professional hairstyling sales and direct to consumer drove the declines and would continue to. “We saw a reduction in U.S. professional orders as we believe macroeconomic concerns are impacting the stylist community. Our key distributors chose to pull back on inventory levels in response to the lower sell-through trends,” he added.

The company said it’s altered its sourcing plans to meet the demand contraction and expects some challenges ahead to trim inventories in a quickly changing environment.

Tiziani said ss the sales forecast came down, Olaplex’s inventory rose higher than the company expected, but it’s confident its remedies will trim inventory to target levels during 2023.

“We are also pushing forward with key savings initiatives in our supply chain, such as our new European manufacturer as well as a new warehouse and logistics provider in the U.S. that we expect will generate significant cost efficiencies in 2023 and beyond,” he concluded.

The global luxury hair care market is expected to grow from $19.27 billion in 2021 to $20.62 billion in 2022 at a compound annual growth rate (CAGR) of 7.1%. The luxury hair care market is expected to grow to $27.22 billion in 2026 at a compound annual growth rate (CAGR) of 7.2%., accordion to Luxury Hair Care Products Global Market Report 2022

The Asia Pacific was the largest luxury hair care market region in 2021. 

In December 2021, Procter and Gamble (US:PG), a US-based consumer goods corporation operating in the luxury hair care market, acquired Ouai Holding, LLC for an undisclosed amount. Procter and Gamble is planning to expand their product lineup through this acquisition.