E.l.f. Beauty ended last year with a bang, ringing in its 16th consecutive quarter of sales growth and enabling it to once again raise its full-year outlook.
While the U.S.’s uncertain economic backdrop may be weighing on some, especially in the prestige sector, the Oakland, California-based mass beauty company saw double-digit sales growth across all key categories.
Net sales gained 49 percent year-over-year to hit $146.5 million in E.l.f.’s third quarter ending Dec. 31. Analysts polled by Factset had forecast sales of $137 million.
As a result, E.l.f. updated its outlook for fiscal 2023 to reflect an expected 38 to 39 percent year-over-year increase in net sales, as compared to an expected 22 to 24 percent year-over-year increase previously.
Net income was $19.1 million, up from $6.2 million a year earlier, while on an adjusted basis it came in at $26.8 million, more than double last year’s $12 million. The latter is now expected to come in between $75.5 million and $77 million, up from the company’s previous outlook of $59 million to $60.5 million.
“Historically mass beauty has done quite well, even during recessionary times. It’s a small luxury everyone can afford,” said chief executive officer Tarang Amin of the company’s strong performance in an interview. “In addition, the category really suffered during the pandemic. People were restricted, they couldn’t go out so I think there is this pent-up demand of people wanting to get out and express themselves. The category’s never been stronger.”
But while mass and makeup are performing well, E.l.f. has become a standout in the category, helped by affordable, innovative products and a savvy social media strategy that has seen it be an early joiner of several platforms.
A recent WWD study of 104 global apparel, luxury, retail and beauty companies found that only 26 firms in the space beat the Dow last year, with E.l.f. leading the way, rising 66.5 percent. This marked quite the turnaround as at one point in 2019 shares fell below $8.
And Amin, a former executive at Pantene who has led E.l.f. since 2014, is confident about the brand’s future.
“[I’m] quite bullish on the category going forward and even more so on our prospects. We are hopeful [on consumer spending]. Obviously everyone’s watching the recession and we are keeping a close eye on that, but the category’s dynamics themselves are pretty healthy,” he continued, adding that for E.l.f., its value proposition and its innovation pipeline is particularly attractive to consumers.