E.l.f. Beauty is crossing the pond and will land in U.K.’s Superdrug doors this quarter.
The Superdrug doors represent E.l.f.’s first European distribution. “We’ve been there as an e-commerce business for a few years,” said E.l.f. chief executive officer Tarang Amin. “This is our first major distribution in the U.K.” Outside the U.S., the brand is also sold in Canada and Mexico.
E.l.f. will move into a “sizable subset” of Superdrug doors and expand from there, he added.
The beauty business has set up a third-party distribution center in the U.K. that will service the business, as well as assist with potential future European penetration, said E.l.f. president and chief financial officer John Bailey on the company’s earnings call Wednesday evening with Wall Street analysts. As it looks for other markets to potentially move into, E.l.f. looks at its ability to seed the product with e-commerce and social media, plus finding the right retail partners, Amin said.
In the U.S., E.l.f. is gearing up to launch in select Ulta Beauty doors after an initial online period, but Amin declined to provide details on the scope of the retail test. The brand is also expanding shelf space at Target by 50 percent, which should be completed by the end of the second quarter, executives said.
For its first fiscal quarter, net sales were up 15 percent year-over-year to $60.6 million from $52.7 million. Net income was $2.2 million down from $3.8 million in the prior year period. Adjusted net income was up 40 percent, to $4.4 million, 9 cents per diluted share, compared with $3.1 million or 6 cents per diluted share. Margins also expanded 748 basis points. E.l.f.’s selling, general and administrative expenses increased to 54 percent of net sales, up from 44 percent, because of “continued investment to support long-term growth,” according to the company.
E.l.f. is projecting net sales between $285 million and $295 million for the fiscal year, with net income between $21 million and $23 million, and adjusted pro forma diluted earnings per share of 40 cents to 43 cents per share.
On the product side, E.l.f. launched 21 new products in the quarter. Nine of those were first to market, Bailey said. E.l.f. also launched its “foundation finder,” an online tool to help customers find their match, which generated a 30 percent increase of online foundation sales from the company’s web site, executives said.
Among the new launches were the company’s first device, a $21 massaging eye wand, and a lip palette collaboration with an influencer that came to market in 13 weeks. The device launch is more an extension of E.l.f.’s skin-care offerings than a specific venture into devices, Amin noted.
“A lot of our innovation really comes from what our enthusiasts are looking for, and many of them like some of these devices, but they are really out of the reach of some consumers” because of price, Amin said. E.l.f.’s device vibrates, massages and heats products as they go into the skin. “It’s less about devices for us…and more about us building regimens in skin care,” which he says is doing well among the company’s mostly Millennial consumers.