Harry’s Inc. 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 said.

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

‘Unmet consumer need’

The move into new categories 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 New York-based brand is optimistic about businesses such as pet care and wellness products.

In December, Harry’s made its first-ever acquisition of a brand, buying deodorant startup Lume for an undisclosed price. A gynecologist looking to help clients dealing with below-the-belt odor founded Lume. The brand represents the kind of solution to real problems Harry’s looks develop or acquire, according to Katz-Mayfield.

A $2 billion valuation

Investors remain optimistic. Harry’s raised $140 million earlier this year to help fund continued growth. Investors currently value it at around $2 billion. It completed a $155 million funding round in 2021 at a $1.7 billion valuation. That followed an acquisition attempt by Edgewell Personal Care Co., which U.S. antitrust regulators thwarted.

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.

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.

Most Harry’s sales now come from stores

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

Competition in consumer goods has intensified, however, and growth will likely get harder to come by. That’s illustrated by the recent troubles of Honest Co. — another startup that’s in some of the same categories as Harry’s — which has been punished in the stock market on weaker-than-expected results and guidance.

Harry’s posted a profit in 2020 and then dipped back into the red in 2021 after boosting investment, in part to improve its supply-chain management. Logistical difficulties also weighed on results. The company is confident it’s on the path to sustainable profits.

Blades sold under the Harry’s brand — which also offers other personal care products such as body wash — accounted for 9.7% of the U.S. men’s razor market category in 2021, according to data compiled by Euromonitor International Plc. The Flamingo brand was 3.9% of the women’s market, making it a potential growth area for Harry’s. The company said its market shares are larger when excluding disposable razors.