Over the years, the company, founded by Amy Errett, opened more than 60 hair color bars across the country, established a wholesale presence with Ulta and later got in on the deal with Target.
Two years ago, when she talked about Madison Reed's hair color bars and the possibility of creating a men's color category, we checked in on her.
With both direct-to-consumer and national retail doing well, the eight-year-old company wants to establish even more of a local relationship with customers by expanding the number of color bars it operates across the country and having a presence in retailers where they typically shop The company said that at the color bars, the hair color is applied by a licensed professional more quickly and cost-effectively than a traditional salon.
I don't believe consumer brands can only be in one channel and succeed. We realized we needed to follow the customers and our business exploded.
Fast-growing Madison Reed is eyeing men’s hair next; “We’re going to blow the doors off that market”
A new $33 million investment will allow the company to hire 850 new colorists by the end of the year. She thinks the company will have 100 stores by the year 2023. New York, South Florida, California, Chicago, Washington, DC and Texas are some of the areas the company is targeting.
The new financing gave Madison Reed $250 million in total funding to date and was led by Sandbridge Capital.
As she got to know Sandbridge, which is an investor in beauty companies like ILIA Beauty and Youth to the People, she felt they understood. Jay-Z's fund, called Marcy Venture, invested in the company that is now known as Savage X Fenty, and is used in media channels.
She said that they were excited to have both of them on board.
In addition to the new color bars, Madison Reed will invest the new financing in additional product launches; unfortunately, Errett stayed mum on what those were, but we can only assume that the men's color might be back on the table.
We already had capital in the bank, but this gives us the ability to execute. She said that this is where the rubber meets the road.
The global hair color industry is expected to be valued at over $40 billion in the next five years. 40 million Americans used permanent color hair coloring products in 2020.
Madison Reed's gross product margins grew to over 80% and revenue doubled over the past two years. The company is starting to gain market share in the salon market, according to Errett.
Jose Zuniga was hired as the CFO of Madison Reed in March. Zuniga was previously with Dollar Shave Club.
The Dollar Shave Club was focused on finding someone with a consumer packaged goods background, but not the traditional way of doing it. Jose understood the financial model, retailers shelves and had the content skills when I first met him. He would be a great culture fit.
It may not be as glamorous as D2C, but beauty tech is big money
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