E.l.f. Beauty Benefits as Consumers Tighten Their Belts

E.l.f. Beauty shrugged off a growing number of headwinds, from technical recessions to record-high inflation to supply chain headaches to currency fluctuations, to clock in its 14th consecutive quarter of net sales growth.

It also beat Wall Street forecasts on both the top and bottom lines.

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“We’re always mindful and keeping our eyes open in terms of how the consumer is faring, but our business has actually done extremely well regardless of the environment,” Tarang Amin, E.l.f.’s chairman and chief executive officer, told WWD in an interview as the company reported its first-quarter fiscal 2023 results. “We were one of the few brands that really grew strongly through the pandemic when color cosmetics was impacted. We made it through different supply disruptions and lockdowns in China, so I would say what gives me confidence even in a recessionary environment is that value equation. When consumer wallets are getting pinched we have great propositions.”

In particular, he cited E.l.f.’s $10 Power Grip Primer — its bestselling product — as benefiting from consumer trade down from a prestige $34 primer sold by another brand that he did not name, adding that the company is also “picking up a ton of share in the mass arena as well.”

All of this comes despite the fact that E.l.f. increased prices on about two-thirds of its stockkeeping units in May in response to rising transportation costs.

“We’ve actually seen better elasticity that what we had modeled and I think part of it is while we took prices up, we still ensured that we had an incredible value equation,” continued Amin.

On Keys Soulcare, the E.l.f.-owned beauty brand launched in partnership with Alicia Keys 15 months ago, he stressed that it was making “real progress” in terms of building brand awareness in a crowded celebrity beauty space and innovation, including launching its first SPF product earlier this week.

As for W3ll People, the clean brand it acquired in 2020 for $27 million, he added that it is now in a subset of Ulta Beauty stores, and is also continuing to make progress in Target.

For the three months ended June 30, net sales increased 26 percent to $122.6 million, surpassing analysts’ estimates of $117 million. Adjusted net income came in at $21.1 million, or 39 cents per share.

Net income was $14.5 million, while diluted earnings per share were 27 cents. Analysts were expecting EPS of 26 cents.

Its 2023 outlook for net sales increased to $448 million to $456 million, from $432 million to $440 million, while net income is forecasted to come in around $47 million to $48.5 million, versus $43.5 million to $45.5 million.

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