Harry’s moves beyond cheap razors for next growth spurt

April 25, 2022

New York city-based Harry’s catapulted to fame by selling sleek, low-priced razors over the Internet. A decade on, it’s now generating more than half of its sales from brick-and-mortar stores, its founders recently told Ad Age.

The company, which made a splash taking on what founders Andy Katz-Mayfield and Jeff Raider saw as big corporations’ overpriced offerings, is seeing the sales payoff from its expansion to traditional retailers such as Target. It’s also growing in overseas markets, including France and Germany, and entering new categories such as women’s shaving, haircare, deodorant and even cat products. 

The moves by Harry’s could shed light on what’s next for direct-to-consumer businesses as enthusiasm for the model wanes, given many businesses have struggled to turn a profit or maintain growth. In an interview, Katz-Mayfield said there’s still a lot of “unmet consumer need.” In addition to its shaving business, the company now owns brands including Cat Person; and the hair care line, Headquarters.

Raider pointed to growth potential in the company’s core lines of toiletries and razors. But the company has also made inroads into other areas—last year 43% of Harry’s revenue came from categories other than shaving. The company has high hopes for businesses such as pet care and wellness products.

In December, closely held Harry’s made its first-ever acquisition of a brand with the purchase of deodorant startup Lume for an undisclosed price. The brand, founded by a gynecologist looking to help clients dealing with below-the-belt odor, is the kind of solution to a real problem that Harry’s is looking to develop or acquire, according to Katz-Mayfield.

Harry’s belongs to a group of startups that launched in the last decade focusing on Internet sales and subscription services. Now that many of these brands are well established, investors are watching to see whether they can maintain momentum. Many, such as bedding seller Brooklinen, are increasingly turning to physical retail.

Harry’s said sales last year grew 47% to $547 million, including the Lume acquisition, with 54% of that total coming from brick and mortar. The company first entered the mass retail market in 2016, and its products are available at large stores including Target in the United States, Walmart in Canada, and Tesco in the United Kingdom.

Competition in consumer goods has intensified, however, and growth will likely get harder to come by.

But investors remain optimistic: Harry’s raised $140 million earlier this year to help fund continued growth and is currently valued at around $2 billion. It had completed a $155 million funding round in 2021 at a $1.7 billion valuation following an acquisition attempt by Edgewell Personal Care that was thwarted by U.S. antitrust regulators.

The co-founders declined to comment on the timing of a potential public offering. Harry’s is “pretty excited about being an independent company right now,” Raider said.

They didn’t dismiss the possibility of a listing, however. “We think Harry’s over time can and should be an interesting, attractive public company,” Katz-Mayfield said.

Research contact: @adage