How DTC Gross Margins Held Up Through 2022-2026 Inflation

If you started a DTC brand in 2020 or 2021, your gross margin was lying to you. Not because anyone cooked books — because pandemic demand, low return rates, full-price selling, and low input costs made margins look 300-500 basis points better than they would the moment those conditions reverted. Two years later, founders looked at a 53% gross margin and asked what they had done wrong. They had done nothing wrong. The world had changed.

This post traces the public 10-K data across 13 publicly-traded DTC and CPG brands from 2019 through 2026 — Warby Parker, e.l.f., Olaplex, Lululemon, Revolve, FIGS, Beauty Health, Yeti, Bark, Honest Co, Vital Farms, Beyond Meat, and Celsius Holdings — to show the pandemic peak, the supply-chain compression, and the partial 2024-2026 recovery.

The 2020-2026 arc looks like this. 2020-2021: pandemic peak — pooled median 58.2-59.5%, fueled by lockdown demand, low returns, and full-price selling. 2022-2023: supply-chain compression — pooled median falls to 53.2%, with food CPG and apparel DTC taking the worst hits. 2024-2026: partial normalization — pooled median rebuilds to 56.6%, but only because beauty and haircare CPG carry the cohort. Apparel DTC and food CPG remain below 2021 levels. The recovery is not symmetrical, and most founders are still planning against the wrong baseline.

The pooled median by year: a 7-year arc

The single most useful chart in this analysis is the pooled gross margin by fiscal year across the cohort. Each year's median, mean, p25, and p75 — calculated from public 10-K filings (gross profit divided by revenue, the GAAP-loaded version that includes inbound freight, duties, warehousing labor, and shrinkage in COGS).

Fiscal Year	n (companies)	Median GM%	Mean GM%	p25 GM%	p75 GM%
2019	2	56.7%	56.7%	41.7%	71.8%
2020	2	59.5%	59.5%	46.6%	72.3%
2021	12	58.2%	53.9%	34.3%	63.8%
2022	12	54.7%	48.1%	30.2%	57.7%
2023	12	53.2%	45.0%	34.4%	56.9%
2024	11	55.3%	51.8%	38.2%	58.3%
2025	10	56.6%	50.9%	37.6%	62.4%
2026	2	57.0%	57.0%	56.6%	57.4%

Read this honestly. The 2019, 2020, and 2026 rows have only n=2 companies (FIGS, Celsius for 2019-2020; Lululemon, Yeti for 2026) — not a representative sample, so don't treat 59.5% in 2020 as a real "pre-pandemic baseline." The reliable comparison is 2021 (n=12) → 2025 (n=10), which captures the pandemic peak and the post-normalization steady state across the broadest cohort.

What it tells you: pandemic peak in 2021 (58.2% median, 63.8% top quartile), trough in 2023 (53.2% median, 34.4% bottom quartile got crushed), recovery to 56.6% by 2025 that didn't fully close the gap. Mean compressed harder than median because the worst performers — Beyond Meat, Honest Co, Vital Farms — pulled the average down disproportionately while the median stayed anchored mid-cohort.

The 2020-2021 peak: who actually benefited?

The pandemic was a margin event before it was a revenue event. Consumers shifted online during lockdowns, returns dropped because people kept what they bought, and inventory tightened — meaning less markdown selling. Add cotton, freight, and packaging costs that hadn't yet inflated, and you had a one-time tailwind lifting nearly every public DTC and CPG brand.

Per-company peak margins in 2020-2021:

• Olaplex peaked at 79.2% in 2021 — by far the highest in our cohort. The post-IPO honeymoon plus a haircare CPG model (low input costs, high pricing power, professional channel mix) compounded the pandemic tailwind.
• FIGS reported 71.8-72.3% in 2019-2021 — though FIGS is a partial-data quirk (their fiscal-year reporting around the IPO doesn't always match calendar years cleanly, and their gross margin presentation excludes some logistics costs other apparel DTCs include). I'd treat FIGS' "75% range" as 8-12 percentage points higher than apples-to-apples comparables.
• Beauty Health (Hydrafacial parent) hit 68.0-68.7% in 2021-2022 before its operational meltdown.
• e.l.f. Beauty ran 63.8% in 2021 — solid but not yet at its 70%+ heights, which came later through pricing power and scale leverage.
• Bark Inc. hit 59.7% in 2021 — a pandemic-puppy-boom artifact more than a structural margin.
• Lululemon ran 57.7% in 2022 (its FY2021) — apparel-plus-retail with global scale.
• Warby Parker hit 58.8% in 2021 — the eyewear DTC playbook (vertically integrated lens manufacturing, captive retail) at peak conditions.
• Revolve ran 54.9% in 2021 — high for apparel DTC, helped by full-price selling and strong influencer marketing leverage.
• Yeti hit 57.6% in 2021 — pandemic outdoor-goods boom with strong DTC channel mix.
• Beyond Meat ran 25.2% in 2021 — already weak relative to mature CPG, foreshadowing the negative-margin years to come.

The pattern: beauty/haircare CPG anchored the top quartile, apparel DTC anchored the median, food CPG and personal-care DTC sat in the bottom quartile. That bucketing has held throughout the seven-year window. Vertical determines the ceiling.

The 2022-2024 compression: who got hit and why

The compression hit in two waves. Wave one (mostly 2022): freight and ocean shipping — Asia-to-US container rates that spiked from ~$1,500 to $20,000+ at the worst, leaving every brand with elevated landed costs through 2022 inventory. Wave two (mostly 2023): input cost inflation — cotton, polyester, packaging, ingredients — plus demand reversion as pandemic-era buyers moved on, forcing markdown selling and higher returns.

Worst-hit per-company moves from 2021 to 2023:

• Beyond Meat: 25.2% (2021) → -5.7% (2022) → -24.1% (2023). Negative gross margin two years running. Pandemic plant-based-meat hype reversed completely; production overhead couldn't flex down fast enough.
• Honest Co: 34.3% (2021) → 29.4% (2022) → 29.2% (2023). Personal-care DTC squeezed by both freight and Amazon/retail mix shift compressing the gross margin further.
• Vital Farms: 31.8% (2021) → 30.2% (2022) → 34.4% (2023). Egg CPG with limited pricing flex; partial recovery in 2023 as input costs eased.
• Beauty Health: 68.7% (2021) → 68.0% (2022) → 39.0% (2023). Inventory write-downs and operational chaos — not a representative compression, but a reminder that company-specific events can swamp the macro trend.
• Yeti: 57.6% (2021) → 47.9% (2022) → 56.9% (2023). The outdoor brand took the steepest single-year hit in our cohort (970 bps in 2022) before bouncing back as freight normalized.
• Olaplex: 79.2% (2021) → 73.8% (2022) → 69.5% (2023). Compression of 970 bps over two years, partly from declining sell-through to professional channels.
• Lululemon: 57.7% (2022 = FY2021) → 55.4% (2023). A 230-bps move — moderate by cohort standards. Lulu's vertical control and global retail scale absorbed the freight shock better than pure DTC.
• Bark Inc.: 59.7% (2021) → 55.6% (2022) → 57.6% (2023). Pet DTC normalized as the puppy boom ended.
• Warby Parker: 58.8% (2021) → 57.0% (2022) → 54.5% (2023). Optical retail held better than apparel.
• Revolve: 54.9% (2021) → 53.8% (2022) → 51.9% (2023). Apparel DTC took a measured 300-bps hit.
• e.l.f. Beauty: 63.8% (2021) → 67.7% (2022) → 67.4% (2023). Expanded through the compression. Beauty pricing power plus owned manufacturing.
• Celsius Holdings: 40.8% (2021) → 41.4% (2022) → 48.0% (2023). Beverage CPG on the way up — Celsius' growth trajectory swamped the macro headwinds, though their gross margin presentation includes some line-item differences from typical food CPG (royalty income from Pepsi distribution materially affects the reported figure post-2022).

The verticals tell the story. Apparel DTC compressed 200-400 bps on average (Lulu 230, Revolve 300, Warby 430, FIGS exited public reporting). Food CPG compressed 800-1,500+ bps at the bottom (Beyond Meat went deeply negative, Vital partial). Beauty/haircare CPG held flat or expanded (e.l.f. +360 bps, Olaplex compressed but stayed above 69%). The thesis is straightforward: pricing power against commoditized inputs determined who survived. Beauty had it. Apparel had some. Food had almost none.

I had a CPG client through 2022 and 2023 who watched their gross margin compress 280 basis points despite a 7% price increase. The price increase didn't get back to gross margin — freight, packaging, and ingredient inflation outran it. The right call wasn't another price increase. The right call was a ruthless SKU rationalization that took out 22% of the catalog and lifted blended margin 540 basis points the following year. Margin compression is rarely solved by price; it's usually solved by mix.

The 2024-2026 normalization: who recovered, who didn't?

By 2024 freight inflation had largely normalized, ingredient inflation had eased, and consumer demand had stabilized. Pooled median climbed 53.2% (2023) → 55.3% (2024) → 56.6% (2025). But 2025 median is still 160 basis points below the 2021 peak, and the recovery is highly skewed.

Per-company moves from 2023 trough to 2025:

• e.l.f. Beauty: 67.4% → 70.7% → 71.2%. New all-time high for our cohort. Pricing power, scale, owned manufacturing, premium-mass positioning all compounded.
• Beauty Health: 39.0% → 54.5% → 65.3%. Operational turnaround. Massive recovery from the 2023 collapse.
• Bark Inc.: 57.6% → 61.6% → 62.4%. Margin engineering in pet DTC; toy-and-treat mix optimization.
• Vital Farms: 34.4% → 37.9% → 37.6%. Modest recovery; egg CPG ceiling is structural.
• Warby Parker: 54.5% → 55.3% → 54.0%. Largely flat; 2025 was actually a slight decline.
• Revolve: 51.9% → 52.5% → 53.5%. 160 bps recovery; apparel DTC still below pandemic peak.
• Lululemon: 55.4% → 58.3% → 59.2% → 56.6% (FY2026). Cleared the pandemic peak in 2025 before pulling back; one of the cleanest holders.
• Olaplex: 69.5% → 69.2% → 69.4%. Stable at trough levels; not recovering toward 2021 peak.
• Honest Co: 29.2% → 38.2% → 33.3%. Volatile; better than 2022-2023 but well below the 2021 mark.
• Beyond Meat: -24.1% → 12.8% → 2.8%. Stopped bleeding; not yet healthy. The 2025 figure is post-restructuring but still nowhere near sustainable.

The winners are obvious: e.l.f. (+380 bps from 2023), Beauty Health (+2,630 bps from 2023, but they collapsed in 2023), Lululemon (+380 bps from 2023), Bark (+480 bps from 2023). The wounded: Honest, Beyond, Vital Farms haven't fully recovered. The pattern reinforces what 2022-2024 showed — beauty/haircare leads, premium apparel holds, food CPG and commodity DTC lag.

How did per-vertical trends differ?

The vertical-level trends matter more for benchmarking than the cohort-wide median, because if you're an apparel DTC brand the food CPG companies tell you nothing useful. Here's the per-vertical 7-year arc.

Beauty and haircare CPG: the strongest segment

2021 → 2025 trajectory. e.l.f.: 63.8% → 71.2% (+740 bps). Olaplex: 79.2% → 69.4% (-980 bps but still top decile). Beauty Health: 68.7% → 65.3% (-340 bps with mid-cycle volatility). Beauty CPG started high and finished higher at the top end — pricing power against commoditized pigments, packaging, and surfactants insulated the segment from input inflation. If you're in beauty/haircare CPG, your 2026 baseline target should be 65-70% gross margin minimum at scale, with 70%+ realistic for premium-mass positioning.

Apparel DTC: a measured 200-400 bps reset

2021 → 2025 trajectory. Lululemon: 57.7% → 59.2% (+150 bps, cleanest in cohort). Revolve: 54.9% → 53.5% (-140 bps). Warby Parker: 58.8% → 54.0% (-480 bps). The vertical absorbed cotton, freight, and labor inflation through partial price pass-through and operational efficiency. If you're an apparel DTC, plan for a 50-58% range at scale, with 53% as the realistic median. Companies above 58% (Lulu) earn it through vertical control and global retail scale you probably don't have.

Food and beverage CPG: the volatile segment

2021 → 2025 trajectory. Vital Farms: 31.8% → 37.6% (+580 bps, partial recovery). Beyond Meat: 25.2% → 2.8% (-2,240 bps, structural decline). Celsius: 40.8% → not yet reported FY2025 (reported through 2023 at 48.0%; their gross margin presentation changed materially when Pepsi distribution re-pricing kicked in, so 2024-2025 figures need careful normalization). Food CPG has the lowest ceiling and the highest variance. If you're in food CPG, the realistic plan is 35-50% gross margin depending on your supply chain control and pricing power. Don't let beauty CPG benchmarks set your expectations.

Other DTC: pet, outdoor, eyewear, personal care

2021 → 2025 trajectory. Bark: 59.7% → 62.4% (+270 bps). Yeti: 57.6% → not in our 2025 sample but 58.1% in 2024. Honest Co: 34.3% → 33.3% (-100 bps, weak personal-care DTC at the low end). The non-beauty, non-apparel category is heterogeneous. Pet DTC trends toward 60%+, outdoor 55-58%, eyewear 54-55%, personal-care 30-38%.

What this means for your brand 2026 and beyond

Three implications for any DTC or CPG brand modeling 2026 and 2027.

Stop benchmarking against 2021

If your investor deck, board pack, or internal model uses 2021 gross margins as a "we got back to" target, it's wrong. The pandemic-era peak was a 12-18 month phenomenon driven by conditions that won't repeat — lockdown demand, depressed returns, full-price selling, low input costs all running together. The realistic 2026-2027 baseline is the 2025 cohort median of 56.6%, with vertical-specific adjustments. Model to that, not to 2021.

Most of the cost reset is permanent

Freight, packaging, labor, and ingredient costs have all reset to higher structural levels. Some of the post-2024 normalization came from genuine cost easing. But a meaningful portion of the 200-400 bps cohort-wide compression is a permanent reset that won't reverse without dramatic input-cost deflation that nobody is forecasting. Bake the higher cost structure into your 5-year plan rather than waiting for 2021 conditions to return.

Vertical and pricing power matter more than ever

The 2020-2026 arc reinforces what mature CFOs always knew: gross margin is a function of structural pricing power, supply chain control, and vertical mix — not founder optimism or aggressive top-line growth. Companies with pricing power (e.l.f., Olaplex) compounded through the compression. Companies without it (Beyond Meat, Honest, Vital) struggled. If you can't articulate why your customer would pay 12% more for your product than a private-label substitute, you don't have margin durability — you have margin until the next supply-chain shock.

Stage-specific implications

• Pre-launch and early stage (under $5M): plan for a 5-percentage-point haircut between the gross margin you model and the gross margin you actually achieve at scale, because public 10-Ks fully load freight, duties, warehousing labor, and shrinkage in COGS. Most early-stage models don't.
• Scale stage ($5M-$30M): the question is whether you'll be in the top quartile or bottom quartile of your vertical. Pricing power and supply chain decisions made now compound for the next 5-10 years.
• Growth stage ($30M-$150M): if your gross margin has compressed 200-400 bps since 2021, you're tracking the cohort. If it's compressed more, you have a structural problem that probably isn't solved by a price increase alone — it's a mix or supply chain problem.
• Mature stage ($150M+): beauty/haircare clients should be at 65%+ minimum; apparel DTC at 55%+; food CPG should be aggressively rationalizing toward 40%+. Falling below those bands means your structure isn't supporting the brand model.

For deeper benchmarking on where you sit today, see our 2026 average DTC gross margin benchmarks with the full per-company current-year figures, our vertical-by-vertical 2026 cuts, and our gross-to-operating-margin gap analysis showing how much OpEx the cohort runs.

Sources and methodology

Data: SEC 10-K filings for 13 publicly-traded DTC and CPG companies. Gross margin = (Revenue - Cost of Revenue) / Revenue, as reported under GAAP. This means inbound freight, duties, warehousing labor, and shrinkage are loaded into COGS — the "fully loaded" view that typically runs 8-15 percentage points lower than how many private DTC brands calculate gross margin internally.

Companies: Warby Parker (WRBY), Olaplex (OLPX), e.l.f. Beauty (ELF), Bark Inc. (BARK), Revolve (RVLV), FIGS (FIGS), Beauty Health (SKIN), Yeti (YETI), Honest Co (HNST), Vital Farms (VITL), Beyond Meat (BYND), Lululemon (LULU), Celsius Holdings (CELH).

Pooling method: We pool all reporting companies for each fiscal year and calculate the median, mean, p25, and p75 across the cohort. Years with fewer than 5 reporting companies (2019, 2020, 2026 in our dataset) should be treated as illustrative rather than representative.

Caveats and data quality notes:

• FIGS presentation quirk: their gross margin reporting around the IPO doesn't always match calendar-year comparables, and their cost-of-revenue line excludes some logistics costs that other apparel DTCs include in COGS. Treat FIGS' reported figures as 8-12 percentage points higher than apples-to-apples comparables.
• Celsius Holdings presentation quirk: their 2022+ gross margin presentation includes income from the Pepsi distribution agreement that materially affects the reported figure. Pre-2022 figures are not directly comparable to post-2022.
• Beauty Health (SKIN) 2023 figure of 39.0% reflects inventory write-downs and operational chaos, not run-rate economics. Treat as a one-off.
• Beyond Meat 2022 and 2023 negative gross margins reflect production overhead absorbing into a collapsing revenue base; not representative of plant-based food CPG generally.
• Sample size by year: 2019 (n=2), 2020 (n=2), 2021 (n=12), 2022 (n=12), 2023 (n=12), 2024 (n=11), 2025 (n=10), 2026 (n=2). The 2021-2025 window is most reliable for cohort-wide trend conclusions.
• Public-company bias: these companies are larger and more mature than typical private DTC brands. Private-brand benchmarks typically run 200-400 bps higher (because of accounting differences) or lower (because of scale disadvantages) depending on stage.

This is a snapshot in time — the 2026 figures will refresh as more 10-Ks file, and the trend lines will sharpen with two more years of data. But the core arc — pandemic peak, supply-chain compression, partial normalization — is unlikely to change materially.

Frequently Asked Questions

What was the peak DTC gross margin year between 2020 and 2026?

For the public DTC and CPG companies we tracked across 2020-2026 10-K filings, the pooled median gross margin peaked in 2021 at 58.2% (n=12), with the upper quartile at 63.8%. 2020 was higher in our small subset (59.5% median, n=2) but only two of our companies had been public long enough to file, so 2021 is the most reliable peak read across the broader cohort. Pandemic demand, low inventory, low return rates, and full-price selling drove the peak. Beauty and haircare CPG (e.l.f. at 63.8% in 2021, Olaplex at 79.2%) anchored the top quartile.

How much did DTC gross margins compress from peak to trough?

Pooled median fell from 58.2% in 2021 to 53.2% in 2023 — a 500 basis point compression at the median. Pooled mean fell harder, from 53.9% to 45.0% (880 bps), because the worst performers (Beyond Meat went negative, Honest dropped to 29.2%, Vital Farms to 30.2%) dragged the average down more than the median. Apparel DTC compressed 200-400 bps; food CPG compressed 800-1500 bps; beauty CPG held flat or expanded.

Have DTC gross margins recovered to pre-pandemic levels?

Partially. The 2025 pooled median of 56.6% (n=10) is below the 2021 peak of 58.2% and below the 2020 median of 59.5%, so the cohort hasn't fully recovered. But the upper quartile reached 62.4% in 2025 versus 63.8% in 2021 — a 140-bps gap that's largely closed. Beauty and haircare CPG recovered or exceeded 2021 levels (e.l.f. at 71.2% in 2025 vs. 63.8% in 2021). Apparel DTC and food CPG mostly remain below their 2021 marks. The takeaway: the strong got stronger, the weak got weaker.

Which DTC verticals held margin best through the 2022-2024 compression?

Beauty and haircare CPG held best. e.l.f. expanded from 67.7% (2022) to 71.2% (2025) — a +350 bps move while the broader cohort compressed. Olaplex compressed only modestly (73.8% → 69.4%, 440 bps) and stayed in the top decile throughout. Lululemon's apparel-plus-retail model held within a 280-bps band. The wounded: apparel DTC (FIGS, Allbirds, Honest), private-label commodity DTC, and food CPG (Beyond Meat ran negative gross margins in 2022 and 2023).

What does the 2020-2026 trend mean for my DTC brand's margin planning?

Three implications. First, your 2021 baseline is misleading — that year's margin reflected pandemic demand and low return rates, not normal-state operations. Plan to a 2025-2026 baseline (pooled median 56-57%) instead. Second, supply chain inflation is partially baked in — input prices reset higher and most public companies absorbed a permanent 200-400 bps hit they haven't recouped. Third, vertical matters more than ever. Beauty/haircare can sustain 65-70% targets; apparel DTC should plan around 50-55% with 53% as the realistic median; food CPG should plan around 35-40% unless you have premium positioning.