Executive Briefing
The Ozempic dupes are crushing it for Hims & Hers
Also: Another non-alc bottle shop is closing. And can Brian Niccol save Starbucks?
By Dan Frommer on Wednesday, August 14, 2024 at 8:00 am
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Hello hello! It’s Dan Frommer, back with The New Consumer.
Huge move by Starbucks yesterday, hiring Chipotle’s Brian Niccol as its new CEO, replacing Laxman Narasimhan, who joined in 2022 and has not inspired.
Niccol, for context, took over Chipotle in 2018 when it was in a very bad place, following multiple food-safety crises that all but ruined the brand. He’s done a great job since then, rebuilding trust with consumers, doubling the size of the business, establishing Chipotle as a leader in digital, thriving during the pandemic, building a process for innovation, and putting the right people in place to execute good, youthful marketing without doing anything too stupid.
Chipotle’s stock price grew 10x during Niccol’s tenure, though it has declined almost 20% since June, plus another ~10% yesterday morning when the company announced he was leaving. (Kind of a cool endorsement by the market, no? Even better, Starbucks shares jumped 20% on the news. Can he get that stock grant priced retroactively?)
At Starbucks, Niccol will have different messes to clean up, on a much larger scale: Declining sales, activist shareholders, rising competition on both the low and high ends, a shrinking China business, labor issues, and a mismanaged brand that’s still full of potential.
What should Starbucks be in the mid-2020s? That’s a longer letter for another day. During its rise to global prominence, Starbucks taught many millions of people to care about coffee and pioneered the sort-of-cool corporate third space; now it’s selling unhealthy dessert drinks during an obesity crisis. But I’m venti excited to see Niccol take this one on.
It’s been a rough couple of years for many direct-to-consumer e-commerce businesses, but here’s one that’s still growing rapidly: Hims & Hers, which provides access to telehealth services and prescription drugs for things like hair loss, weight loss, and sexual health.
The company generated $316 million in revenue during the second quarter, up 52% from the same period a year ago. This despite spending a smaller portion of its revenue on marketing (though still high at 46%). Free cash flow almost quintupled. And it finished June with 1.9 million subscribers, up 43% year over year.
One thing that’s helped: A new line of business Hims launched in May, adding access to relatively inexpensive GLP-1 injections — drugs similar to Ozempic and Wegovy — to its weight loss program.
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Hi, I’m Dan Frommer and this is The New Consumer, a publication about how and why people spend their time and money.
I’m a longtime tech and business journalist, and I’m excited to focus my attention on how technology continues to profoundly change how things are created, experienced, bought, and sold. The New Consumer is supported by your membership — join now to receive my reporting, analysis, and commentary directly in your inbox, via my member-exclusive newsletter. Thanks in advance.