Olaplex is losing favor with its most critical ambassadors – hairstylists. Sales at salons are down 61%.

• Olaplex is losing ground with hairstylists, a key source of new customers for hair care products.
• The brand's sales through stylists fell 61% during its second quarter, which ended in June.

Olaplex's sales are continuing to fall, and a key source of purchases is leading the decline: hair salons.

The bond-building shampoo brand's sales fell 48% to $109 million during the second quarter that ended on June 30, the company reported on Tuesday. Olaplex also cut its projections for sales and profit for the rest of 2023.

Sales at salons fell even more, at 61%. Hair salons represented about 38% of Olaplex's total sales during the quarter. But according to Olaplex, stylists play an outsized role in growing sales. Many Olaplex users first encounter the brand when their stylist uses it, and the company is counting on those first trials to turn customers into long-term users.

"The stylist continues to be the backbone of who Olaplex is," CEO JuE Wong said at a conference in May. Wong cited surveys of consumers showing that "the number one source of truth is recommendations of hairstylists to their clients."

But Olaplex has faced multiple challenges over the last several months. One of them was a lawsuit, in which about 100 Olaplex users claimed that the company's products had caused hair loss and other damage. A judge last month severed and dismissed the claims, but Wong has told investors that the claims and others like them in the media have affected Olaplex's reputation.

Other products that claim to strengthen users' hair have also appeared on the market, increasing competition for Olaplex products.

"We recognize that these factors are having a particularly negative impact on the performance of our professional channel and views of the brand with some members of the stylist community," Wong said during a call on Tuesday to discuss Olaplex's second-quarter results.

Wong said that stylists are still "the foundation of our brand and its core to maintaining our credibility."

The company started a new marketing campaign in June aimed at improving its image with both stylists and customers. Direct-to-consumer sales on the brand's website were down just 6% during the quarter, a "leading indicator" that the campaign is working and that the brand's sales are starting to stabilize, Wong said on Tuesday's call.

Olaplex went public in October 2021. Since then, its share price has fallen about 85%, according to S&P Capital IQ. The company has also lost several top executives since October, Insider reported in April.