The outside of an E.l.f. cosmetics store in Livingston, N.J.

After growing sales in 2016 by 20 percent, E.l.f. Beauty is projecting an even bigger jump for 2017.

The mass-market beauty company, which sells products in retailers like Target as well as through its own freestanding stores and on its web site, said it anticipates sales will increase by 24-28 percent for 2017. That figure would put the company between $285 million to $295 million in net sales for 2017, with net income between $21 million and $23 million and adjusted diluted EPS of 40-43 cents.

The predictions come as E.l.f. reported full-year earnings for 2016, which came with news of a more than 50 percent shelf space increase for the brand at Target.

E.l.f. has a 14.4 percent unit share and 8 percent dollar share of Target’s color cosmetics market, according to chief executive officer Tarang Amin. “The reason we got that [added shelf space] is the consumer profile we had,” he said, referencing the brand’s Millennial and beauty-obsessed consumer. “We continue to partner with [Target] to grow our category.” He added that in 2016, the brand was No. 1 in unit-share and No. 4 in dollar share for Target in color cosmetics.

For the year, E.l.f. posted net income of $5.3 million, up from $4.4 million year-over-year. Net sales were up 20 percent to $229.6 million, driven by sales growth at national retailers and the company’s direct-to-consumer business. Diluted earnings per share were 36 cents.

For the fourth quarter ended Dec. 31, E.l.f.’s sales were up 17 percent to $76.4 million. Net income was up to $6.6 million, from $2.4 million in the prior-year period, or 19 cents per diluted share.

The company went public in September, and Amin said at an ICR conference in January that he thinks the business has the potential to be a billion-dollar brand, adding E.l.f. has a less than 3 percent market share in the U.S. color cosmetics space, which gives it ample room to expand. He clarified on in an interview Wednesday, saying that according to IRI data at the end of 2015 E.l.f. had 2.7 percent market share, and at the end of 2016 that jumped to 3.4 percent.

Executives declined to discuss other potential retail expansion details with Wall Street analysts on a call Wednesday, but did note that the company’s experience with shelf space at Wal-Mart has been “more continuous” and that as Wal-Mart adjusts stores, E.l.f. benefits. That comes as retailers, including Wal-Mart and Target have put pressure on companies to lower prices. Elf is not necessarily feeling that squeeze, said president and chief financial officer John Bailey.

“Beauty is a relative bright spot within their overall box,” he said. “Within that, we’ve been able to sustain strong growth regardless of the macro environment.”

“We certainly believe we’re at an advantage,” Amin added. “We look at opportunities when there [have been] challenges to be able to grow share, and that’s exactly what we’ve been able to do.”

E.l.f. also credited its Beautyscape program – where it has influencers throw parties to reach target consumers, and its Beauty Squad loyalty program – as growth drivers. The Beauty Squad program doubled in the fourth quarter, to 190,000 members, according to Amin. While members accrue points that work towards purchases, the idea of the Beauty Squad is larger, and includes perks like product previews, voting on potential collaborations and points for engaging with the brand. The concept, Amin noted, is to continue building the community the brand launched with 13 years ago when it sidestepped traditional marketing for a word-of-mouth approach.

“We want to keep that community, even as we scale the business,” he said.

 

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