E.l.f. Beauty posted another quarter of net sales growth, and has raised its guidance.
The beauty business, which owns E.l.f. Cosmetics, W3ll People and Alicia Keys’ Keys Soulcare, posted a 27 percent gain for the quarter ended Sept. 30. E.l.f. Posted $91.9 million in net sales for the quarter, compared to $72.4 million in the prior-year period. Net income was $5.7 million, compared to $447,000 in the prior-year period.
E.l.f. raised its financial guidance, and is now projecting net sales between $364 million and $370 million for fiscal 2022.
For the six months ended Sept. 30, E.l.f. posted $188.9 million in sales, up 38 percent year-over-year, from $136.9 million. Net income for the period was $14 million, compared to nearly $2 million in the year-ago period.
Chief executive officer Tarang Amin said the company has been able to continue gaining market share, which is up 30 basis points from last year, and 120 points from two years ago. He said shoppers are gravitating toward the brand’s “holy grail” products, including primers, concealers, brushes, sponges and brow products. Camo CC Cream helped the company build more in the foundation category, while Big Mood mascara helped build the mascara category, he added.
“We also had this nice little…cultural moment where we were the question on Jeopardy,” Amin said. Longtime Jeopardy winner Matt Amodio was asked a question about E.l.f., which he got wrong, Amin said. “We made friends with him right away. The next day our website went live — his answer was, ‘What is ears, lips face,’ — we went live with ears, lips, face, we had great banter with him,” Amin said. “We ended up donating the $8,000 that he lost on that question to Dress for Success, a charity that he supports.”
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Jumping on those types of opportunities helps continue the company’s momentum, Amin said.
“We don’t know how we got there, but…the company is definitely hitting more than the mainstream,” Amin said.
E.l.f. continues to see success online and with retail partners, he said, and has already put out some of its holiday offerings.
That call is related to supply chain disruptions, which have caused E.l.f. transportation issues. Amin said the company saw the “container imbalance” five to six months ago, and switched plans to make sure key products would be in stock.
“We made some tough choices early on. We decided to take up our inventory levels just to make sure we had enough inventory here knowing that it would be longer lead in terms of getting inventory in. We canceled the main part of our holiday program, really prioritizing that container space for our core business,” Amin said. “We proactively talked to our customers about doing that, and a few months later every single one of them said, ‘Oh my god, you guys are so far ahead of everyone else. No one’s able to get us their holiday collections,’” Amin said.
“Even with all the supply chain disruptions, I would say [we’ve] been able to keep in-stock levels with our key customers around 95 percent,” he added.
E.l.f. has also diversified its supply chain, and added new suppliers in Thailand and Taiwan, Amin said. The company canceled plans to open a manufacturing facility in California. “As we came out of the restrictions opening up, the business case of it didn’t really pan out,” Amin said. “We’re still interested in diversification of our supply chain.”
Many other businesses — including Procter & Gamble and the Estée Lauder Cos. — have increased prices due to higher supply chain costs, but Amin said E.l.f. has not raised them yet. “We priced earlier this year on a subset of our skus — we took a pretty big price increase internationally, that’s done really well,” Amin said. “Imbalances tend to balance…the cost per container is way higher than it was last year. We’re not seeing it continue to rise, we’re seeing it start to moderate a bit.”
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