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Critical Mass: Retail Expansion Fuels E.l.f.’s Growth Spurt

The brand is expanding its store distribution in a move that puts it on track to reach more than $125 million in retail sales this year.

NEW YORK — E.l.f. Cosmetics wants to grow up.

After debuting online in 2004 with just 13 items, the brand’s revenues hit $20 million in less than two years. Now, E.l.f., which stands for ‘eyes, lips, face,’ is expanding its store distribution in a move that puts the brand on track to reach more than $125 million in retail sales this year, according to industry sources.

The goal is to expand door count by 30 to 35 percent this year in both the U.S. and on a global basis. E.l.f. currently is the number one mass brand in terms of share of beauty traffic online, according to the company. Founder and chief executive officer Joey Shamah said more merchants are experiencing the pull of the value brand, as most items are less than $5.

To take it to the next level, E.l.f. recently tapped former Markwins International senior vice president Shawn Haynes for the newly created role of vice president of sales. Retailers credit Haynes, a 15-year veteran of the beauty business, with helping reinvigorate Markwins’ brands, including Wet ‘n Wild.

E.l.f. also has the financial backing to expand, thanks to TSG Consumer Partners, a private equity firm that acquired a minority stake in the firm last year. TSG, no stranger to beauty, was the investor in Smashbox prior to its sale to the Estée Lauder Cos. Inc.

“We really matured as a company between 2010 and 2011,” said Shamah. “We are ripe to continue growth online and in stores. Shawn brings a unique skill set and an invaluable seasoned approach in selling to traditional beauty outlets.”

Haynes said his experience in understanding the mass market would help E.l.f. navigate the peculiarities of selling to mass retailers.

Target was among the first to give E.l.f. a shot in a limited store test, and have since rolled it out chainwide. E.l.f. also is sold in Kmart and Meijer and is gearing up to launch in Wal-Mart. Its online presence offers the chance to test product performance before taking it to the stores. “We have over 1,300 stockkeeping units online and we launch new items every month,” said Haynes. “We have the ability to spot a trend, test it and bring it to market faster than any other brand in our space.” One collection that has been a success online and is now being rolled out to stores is Studio, a more upscale line that includes a new lengthening mascara. A bevy of new items are hitting shelves and cyber retail including a zit zapping concealer, a glitter eye shadow, a face line filler, shimmer sheets and lotion wipes.