E.l.f. Magnificence Turns 20 With $1 Billion in Gross sales, Eyes World Enlargement

Wall Avenue and Gen Z don’t typically discover frequent floor, however there may be one factor they appear to agree on: Each side love E.l.f. Magnificence.

The corporate, which is celebrating its twentieth anniversary this 12 months, is the number-one magnificence model amongst younger shoppers, in keeping with Piper Sandler’s 2024 Taking Inventory With Teenagers Survey. It’s additionally one of many top-performing firms on the New York Inventory Trade, notching its twenty second consecutive quarter of progress and surpassing $1 billion in gross sales for the primary time in its historical past.

And whereas the current downturn within the total magnificence market has dampened the passion barely, beneath the aegis of chairman and chief govt officer Tarang Amin, E.l.f. is on an enormous successful streak.

To wit: Its share worth has risen from $139 firstly of the 12 months to round $177 at press time. It’s the second largest make-up model in mass, simply behind Maybelline New York, for the year-to-date ending in Could, in keeping with Circana, and is the highest share gainer. Piper Sandler reported E.l.f. is a high 10 skincare model for teenagers, too, in addition to probably the most desired magnificence retailers.

Not dangerous for a corporation based 20 years in the past by father-son entrepreneurs Alan and Joseph Shamah (with assist from make-up artist Scott Vincent Borba), who noticed house available in the market to supply high-quality cosmetics at a value-driven worth.

Since then, E.l.f. Magnificence has seen many iterations, together with being acquired by personal fairness agency TPG in 2014, which introduced on Tarang Amin, a coinvestor, as chief govt officer.

An business veteran with expertise at P&G and Clorox, Amin’s imaginative and prescient was to create a unique type of magnificence firm by constructing manufacturers that disrupt norms, form tradition and join communities via positivity, inclusivity and accessibility. 

That mission has not modified. “There’s loads in there, however we consider in each phrase of that imaginative and prescient,” he mentioned, throughout a wide-ranging interview with WWD Magnificence Inc through which he shared how the corporate plans on not simply sustaining the momentum — however accelerating it.

First up: World domination. During the last 12 months, E.l.f has doubled down on pursuing worldwide growth. “Worldwide is a large alternative for us,” mentioned chief monetary officer Mandy Fields, noting that worldwide represents about 15 p.c of E.l.f.’s total enterprise. “Presently, our worldwide enterprise is basically concentrated to the U.Ok. and Canada so actually,” she mentioned, “now we have the remainder of the world open to us.”

Just lately, in Europe, E.l.f. rolled out in Etos and Douglas within the Netherlands and at Douglas in Italy. To mark E.l.f.’s bodily growth within the latter, in true E.l.f. trend the model took over the streets of key cities with subway and tram takeovers, bus wraps and digital display screen adverts.

Thus far, the growth is paying off.

“Once we went into Douglas Italy, we rapidly turned their number-one model. We went to Etos within the Netherlands. We turned their number-one model,” mentioned Amin. “There’s plenty of pent-up demand for E.l.f. the world over, and we’re excited to actually go in any case three of the areas.”

Amin harassed that with a lot white house alternative, the problem is execution. That’s why the corporate has been constructing out a global staff, together with opening a global workplace in London.

In a be aware to buyers, Ashley Helgans, an analyst at Jefferies, famous the potential influence of E.l.f.’s launch within the Netherlands, writing, “The footprint of those two retailers is important. The Netherlands mass coloration cosmetics market in 2022 was value $394 million and mass pores and skin $547 million.”

Subsequent on the agenda is Germany by way of drug retailer chain Rossmann’s 1,200 doorways, its largest worldwide growth thus far.

“Germany’s the biggest cosmetics and market in in Europe,” mentioned Amin. “For us, I’d say the method is greater than what nation you decide. It’s will we really feel now we have the precise associate? One of many issues that made us profitable in Italy is that Douglass gave us plenty of assist, the identical with Etos within the Netherlands. They actually bought behind the model. We really feel Rossmann goes to be a terrific associate for us to get the model into Germany.”

Then there’s Mexico, which the model is getting into by way of Sephora within the fall, marking its first time in that nation and in that retailer. In keeping with knowledge from Euromonitor, Mexico was the ninth-largest magnificence and private care market in 2023 at simply over $15 billion, sandwiched between France and Italy. In 2018, it stood at round $10 billion.

On the choice to enter Mexico by way of Sephora, historically dwelling to status magnificence, Amin mentioned that the strains between mass and status have gotten more and more blurred.

“For those who regarded on the make-up bag of an E.l.f. shopper, she’ll have E.l.f., however she would possibly also have a Chanel product in there,” he mentioned. 

On the identical time, he additionally pointed to the truth that outdoors of the U.S., Sephora typically has a larger mixture of each status and mass manufacturers. “That’s one of many the reason why they’re so eager on having E.l.f.,” he mentioned. “They really feel like E.l.f. actually bridges the whole market. And it’s one thing that their consumers have been asking for.”

As for what E.l.f. has discovered from the current geographical growth, whereas each market is completely different to a point, Amin believes there are extra similarities than dissimilarities.

“Once we entered Douglas Italy, we requested them, ‘How a lot would you like us to customise this model for the Italian shopper?’ They informed us, ‘not a lot. Italians love sizzling American manufacturers,’ and that’s precisely what we discovered. By the day we launched, there have been strains all the best way down the block.”

It seems that additionally prolonged to primers, regardless of Douglas’ preliminary doubts. Executives informed Amin and the staff that Italian shoppers don’t use primer. His response?

“We mentioned, ‘However, , Energy Grip is the number-one inventory retaining unit in all the U.S. so we’re going to place it in. If it doesn’t do nicely, we are able to all the time pivot,’” he recalled. “Certain sufficient, the primary sku for Douglas Italy, is our Energy Grip Primer. So apparently, Italians do use primer. They simply didn’t realize it,” added Amin.

He’s equally as bullish on the corporate’s skincare choices. E.l.f. acquired masstige model Naturium from The Heart in October for $333 million, stating on the time that the acquisition furthered the corporate’s mission to make the most effective of magnificence accessible to each eye, lip, face and pores and skin concern. 

With the acquisition, it doubled its penetration inside skincare to twenty p.c and wasted no time in increasing Naturium’s footprint into Ulta Magnificence within the U.S. and Shopper’s Drug Mart in Canada.

“Skincare is an even bigger class globally than coloration cosmetics so we see that as large potential for us as we proceed to increase the E.l.f. Pores and skin portfolio, in addition to proceed to roll out Naturium globally,” mentioned Amin.

E.l.f. Pores and skin can be rising quickly, and has cracked the ranks of the main gamers for the primary time. “We’re now the number-nine skincare model within the U.S., with a couple of 2 p.c share,” mentioned Amin. “Final 12 months, we had been solely at a 1.4 p.c share, so we proceed to develop share, however we nonetheless have an amazing quantity of potential.”

Having each manufacturers as a part of the portfolio has enabled every to attract from the opposite. For instance, Naturium’s success in physique is a possible path ahead for E.l.f., whereas E.l.f.’s relationship with key retailers is useful to increasing Naturium’s footprint.

“With the ability to leverage the capabilities now we have, significantly from a distribution standpoint, is vital” mentioned Amin.

As for whether or not E.l.f. is up for making any extra acquisitions, the corporate is recreation, however would want to discover a goal with the identical caliber as Naturium, which was worthwhile from Day One.

“We consider acquisitions can play a task as we transfer ahead,” mentioned Fields. “The nice factor is now we have a lot natural progress that now we have the luxurious of with the ability to be very choiceful and take our time with what we wish to convey into our portfolio. Naturium was simply straight down the golf green for us. It actually checked all the packing containers — excessive progress, numerous white house, worthwhile values aligned. That’s actually what we’re searching for in an acquisition.”

In her position as CFO, Fields sees manufacturers which can be excessive progress, however not worthwhile, or others which can be worthwhile, however the progress has slowed. 

As for classes, she is open. “We’re very a lot open to exploring different issues and capabilities that different manufacturers may convey to us. It’s not simply coloration cosmetics and pores and skin particularly.”

That doesn’t imply that incubation is off the desk, although, with E.l.f. beforehand incubating Keys Soulcare with singer Alicia Keys. However for now, acquisition appears to be like just like the extra enticing possibility.

“We’re open to each approaches, however there’s a bonus typically in acquisition, the place you have already got the dimensions that provides you a place to begin and that we are able to develop from there,” mentioned Amin. “One of many issues we get with acquisition is larger scale straight away. What we get with one thing like a Naturium is that they went from zero to over 90 million in gross sales in three years. We appreciated the truth that it already had a very good gross sales foundation and a totally developed staff that we may proceed to construct. We’ve been investing within the model, we’ve been investing within the staff, and we proceed to see unbelievable outcomes from it.”

On coloration cosmetics, the largest a part of the enterprise, E.l.f. not too long ago surpassed L’Oréal Paris to grow to be the second largest coloration cosmetics model within the U.S. with a couple of 12 p.c share.

Amin pointed to Goal Corp. to indicate how a lot additional potential there may be for the model in that class. Goal was E.l.f.’s first retail associate — and continues to be rising. “We’re extremely assured that over the following few years, we are able to once more double our market share in coloration cosmetics. Now we have that confidence based mostly on what we’ve been in a position to do at Goal,” he mentioned. “We’re their number-one model with over 20 p.c of their whole class so now we have a excessive diploma of conviction as others replicate the success of Goal that we are able to get clear market management and be the number-one model.”

Analysts have additionally acknowledged that there’s a lot alternative at different retailers within the U.S., too, with shelf house positive aspects at Walmart and CVS, the place the model is under-penetrated.

Fields credited E.l.f.’s success in make-up to its innovation engine and relationship with its group. “We hearken to our group, and we convey gadgets to life that they ask us for,” she mentioned. “Our Bronzing Drops, for instance, that launched this summer season, is an merchandise that our group has been asking for.”

An equally modern method to advertising has additionally been key to its success, and E.l.f. has notched quite a lot of firsts. It’s been among the many earliest of adopters of social media platforms like TikTok, Be Actual and Roblox. It made information with its first Tremendous Bowl industrial in 2023 starring Jennifer Coolidge and adopted with one other this 12 months starring among the “Fits” forged alongside singer Meghan Trainor. Its magnificence collabs are among the many buzziest, like a current one with the favored water model Liquid Demise to create the Corpse Paint Vault for a heavy metal-inspired make-up assortment. All these helped convey new eyes to the model, with it reporting that 68 p.c of shoppers who shopped E.l.f.’s Liquid Demise collaboration had been first-time E.l.f. consumers.

One other space that holds alternative for the corporate is wellness, with Keys Soulcare prime for this. “We basically consider in Alicia Keys, and we all know wellness goes to grow to be more and more essential. That model continues to be fairly small in our total portfolio,” mentioned Amin.

Nonetheless, as with all the things there are all the time challenges on the horizon. With the upcoming U.S. election, the prospect of extra tariffs on China looms heavy, which might influence E.l.f., the place a lot of its merchandise are made.

“We’ve heard on this election cycle that tariffs could be one thing that comes up. We’re already uncovered at a 25 p.c stage on plenty of our gadgets, and so a rise in tariffs is one thing that we’re retaining our ears open for,” mentioned Fields. “We definitely take that very severely, and wish to guarantee that we’re ready within the occasion that it’s a must to tackle further prices from that standpoint.”

Nonetheless, each Amin and Fields are assured about what the long run holds for E.l.f.

“You’re going to proceed to see us disrupt {the marketplace} and proceed to see very robust progress,” mentioned Amin. “If I take a look at what the alternatives and challenges are, now we have three huge areas of white house in coloration cosmetics, skincare and worldwide.”

“We’re within the early innings of what we consider might be attainable for E.l.f,” added Fields. “If you concentrate on others within the magnificence house, we’re amongst the youngest, at 20 years previous, versus 100 years previous for some manufacturers. There may be nonetheless much more potential forward for us. We’re persevering with to chip away to grow to be the number-one model in magnificence.”