Once slated for a 200-door Ulta rollout, E.l.f. is now rolling into all Ulta doors — of which there are more than 1,000 — by the first half of 2018.
“It’s very big news for us given the overlap of our beauty enthusiast consumers,” E.l.f. chief executive officer Tarang Amin said following the company’s Wednesday earnings call. “Even more than the doors is that alignment from a consumer standpoint.”
E.l.f.’s Ulta expansion comes as mass-market retailers struggle too sell products, including once-hot makeup. Amin noted that the company, which has expanded its shelf space with Target and Wal-Mart, continues to fare well in those channels despite broader problems in mass-market retailing.
“There’s a role for each of these core channels,” Amin said. “We have a very good business with both Target and Wal-Mart, and continue to do well there. I don’t know if there’s as much of a shift from mass into specialty, offline into online, as much as consumers are much savvier in terms of what works for them and who speaks to them.”
Amin said E.l.f. has been able to increase its market share to 4.5 percent, according to Neilsen data for the 52 weeks ended Oct. 7 (up from 4 percent).
“When you look at it over a long period of time in color cosmetics, it’s been one of the best categories,” Amin said. He added E.l.f.’s customer is the beauty enthusiast “for whom this isn’t really a discretionary purchase.”
For the third quarter, E.l.f. posted sales gains but decreased its financial guidance.
The business had $71.9 million in net sales, a 28 percent year-over-year increase for the quarter, driven by sales growth in national retailers and the company’s direct business. Net income was $5.9 million, or 12 cents per diluted share. E.l.f. posted gross margin expansion of 60 percent, which the company attributed to margin-accretive innovation and improvements in customer terms, freight costs and foreign exchange shifts, partially offset by customer mix.
For the nine months ended Sept. 30, E.l.f. net sales increased 23 percent to $188.3 million. Net income was $12 million, or 24 cents per diluted share.
E.l.f. also lowered its sales guidance to $270 million in net sales (for 2016, the company posted $230 million in net sales). E.l.f. had previously forecasted between $285 million and $295 million in net sales for 2017.