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SmileDirectClub: The Playbook on how to kill a brand



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Q2’23 SDC reduced its marketing spend by USD 22 million → but paid for that with a 15 percent decline in revenue versus Q1’23, significantly underperforming its peer group – indicating a poor top of funnel marketing performance.


Just one glance at the company’s performance over the last 2 quarters reveals that the Management has been trying to reduce its marketing expense – both on absolute basis as well as % of the company’s revenue. However, unlike expectations, the company’s QoQ revenue performance struggled massively – underperforming the global clear aligner category. Not just that, the recent performance also indicated that any cuts in marketing $ can disproportionately or even exponentially impact the revenue performance on a negative basis.


For SDC, the value of growth is negative, as the company’s ratio of marketing expense to its revenue continues to struggle YoY. The inability of a brand to grow is one thing. Yet, demonstrating negative YoY performance is completely another. When this trend is underlined by a global category in which the #1 brand Invisalign is demonstrating a +HSD growth whereas the top underdogs are growing at anywhere between 20-50% on YoY basis, it brings SDC management under tight scrutiny.


Let it be the bloody red transformation of the clear aligner category or failed company’s management, there is little hope of a turnaround. The company’s financials communicate SDC’s financial health: declining revenues, diminishing margins and failure to manage marketing spend – all while significantly underperforming its peer companies. Not just that, any attempts at reducing the retail footprint commensurable with the market demand have failed to produce the expected outcomes. What’s even worse – the Zombie company has now almost run out of resources to continue its path to nowhere.



To read the complete 24-pages report, please refer to our Research section here (available for registered members only). If you will like to become a client, please contact us.

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