E.l.f. Beauty is managing to cruise through the coronavirus pandemic with its business intact.
The beauty business saw net sales increase 7 percent to $72.4 million in the fiscal quarter ended Sept. 30, driven by increased digital sales and marketing, as well as increased international distribution and growth at U.S. mass retail.
Earnings decreased significantly, to $400,000, from $6.5 million in the prior-year period.
For the six-month period ended Sept. 30, net sales increased 7 percent to $136.9 million, up from $127.4 million in the prior-year period. Earnings were $2 million, down from $10.2 million.
Chief executive officer Tarang Amin attributed the dip in earnings to a significant investment in digital marketing, as well as costs associated with the launch of the company’s new line with Alicia Keys, Keys Soulcare.
Despite decreased earnings, the company has managed to grow sales during the COVID-19 pandemic, with triple-digit growth coming from its digital business, powered by its e-commerce site and retailer web sites including Target, Ulta Beauty and Amazon, where E.l.f. recently launched a beauty store.
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E.l.f.’s loyalty program, Beauty Squad, has grown 40 percent-year-over year and now has more than two million members. Amin said 70 percent of orders on elfcosmetics.com come from Beauty Squad members.
“We’ve had growth across every part of the business,” said Amin. “We continue to see strength on our national retail partners where businesses have really declined, and even internationally we saw strong growth with Boots and Superdrug in the U.K.”
The company today also revealed its entry into Shoppers Drug Mart in Canada. It is already sold in Canada through retailers including Walmart.
Amin said E.l.f. Is not seeing the same slowdown in color cosmetics that is affecting the broader industry, though skin care is the company’s fastest-growing category.
“We’re bucking the trends for the category — cosmetics has been down, but we’ve continued to innovate and launch new products and we’re seeing that innovation resonate and engage with consumers on TikTok and [other] social platforms,” he said.
Amin specifically called out the Poreless Putty Primer, $8; a long-lasting, lightweight primer, as a popular cosmetics product this year. Sales are also strong in the brows and tools category.
Skin care launches from earlier in the year, including E.l.f’s Holy Hydration Cream and Cannabis Sativa line continue to be hits, Amin noted. The category is especially resonant in digital channels. While skin care represents 9 percent of E.l.f.’s total business, it comprises 25 percent of total online sales.
E.l.f.’s investment in skin care will continue into 2021 with Keys Soulcare, which is set to launch next month and roll out to Ulta Beauty earlier next year. Ulta Beauty is also slated to expand the E.l.f. brand’s in-store shelf space next year.
Amin is hopeful about a color cosmetics comeback in the future, despite industrywide sales declines. “I’m personally quite bullish on color cosmetics — it will come back. People have been pent up for so long and it’s very critical to customer expression,” he said.
Amin does not expect the results of the 2020 presidential election to have an effect on the business, citing the brand’s affordable price points and inclusive messaging as key factors in that.