At a time when the global beauty market is slowing due to ample competition and increased discounting at department stores, E.l.f. Beauty has experienced impressive growth since it went public last year to the tune of $141 million.
During its 2017 third-quarter earnings call on Wednesday, the company — which launched in 2004 — reported a net sales increase from the year prior of 23 percent, up to $71.9 million. During the same period, the company’s adjusted net income grew 117 percent.
“We’re better positioned than a lot of the legacy brands with cosmetics fans,” said the company’s chief executive officer, Tarang Amin, pointing to its status of selling luxurious product for lower prices. “There’s a real blurring of the lines, as far as prestige and mass go today; consumers are using both.”
On Wednesday’s call, Amin and E.l.f.’s president and CFO, John Bailey, outlined the company’s four-pronged strategy for growth.
1. Build a strong community.
In 2016, the company launched its Beautyscape program, an initiative focused on partnerships with over 50 micro-influencers. This quarter, the brand expanded the program to more influencers attending New York Fashion Week. The resulting branded content posted on social media reaching a combined audience of 210 million, said Amin.
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E.l.f.’s Beauty Squad loyalty program has also grown in reach, now at 600,000 members since its launch last year. These members, who receive points for everything from friend referrals to retweeting the brand’s tweets, are said to spend 50 percent more than the average shopper on elfcosmetics.com.
2. Innovate rapidly.
E.l.f. is focused on developing and launching new products as quickly and as often as possible. According to Amin, the company launched a total of 49 new products this past quarter, including a new launch every single day in September. This year, the company has launched over 95 items, compared to about 62 the year prior.
“We’re getting faster at our speed of innovation in both color cosmetics and skin care,” said Amin, who noted that this speedier inventory growth was also benefitting the brand’s fulfillment rates — they are currently above 99 percent across national, direct and international sales.
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Built on the concept of luxurious product for lower prices, E.l.f. has also continued to focus on the latter. With its most expensive product retailing for $55, it now sells a satin eyeliner pencil for as low as $1, as well as a range of blushes, bronzers and highlighters for $2.
3. Expand its reach.
A major key to E.l.f.’s success thus far has been increasing brand penetration. Last quarter, the beauty company expanded its space within Walmart stores, pointing to the juggernaut’s investment in creating a better presentation for its beauty merchandise.
The brand also began experimenting with product placement at an undisclosed number of Ulta locations. That partnership was so successful — a phenomenon echoed by other recent Ulta debuts, like MAC Cosmetics — that E.l.f. will be launching in all of Ulta’s almost 1,000 stores during the first half of next year.
“It’s a key destination for beauty enthusiasts,” said Bailey, referencing the beauty-obsessed group that he also views as E.l.f.’s core customer.
In August, the company also opened its first pop-up shop in Times Square, allowing it to really showcase the brand and engage with consumers in a high-traffic area, said Bailey.
4. Update the holiday timeline.
Rather than slate most of its holiday shipments for the fourth quarter, E.l.f. reported that it had already shipped the bulk of its customized holiday assortments to retailers like Walmart and Target. “This has allowed our customers to get a faster start on holiday shopping,” said Amin, highlighting an increasingly popular trend across industries. Although it will continue to ship some holiday products this coming quarter, it will be less than in years prior.
