18/05/2024 2:31 PM


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E.l.f. Beauty (ELF) 4Q 2020 earnings boosted by online sales

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Source: e.l.f.

Shares of E.l.f. Beauty surged more than 5{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in extended trading Thursday after the cosmetics company said sales rose 13{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in the fourth quarter, helped by the strength of its online business.  

The beauty industry has been hard hit as social restrictions around Covid-19 have largely suspended in-person activities. However, E.l.f. Chairman and CEO Tarang Amin said the company’s focus on its online marketplace allowed it to outperform in the face of a broader industry slowdown. 

“We’ve taken up our investment levels on both marketing and digital and it’s just been really great consumer engagement,” said Amin in an interview. “Our e.l.f cosmetics dotcom business is up triple-digits, but I think even our retailer dot-com businesses are up significantly as well.” 

For the quarter ended March 31, e.l.f. reported a loss of $300,000, or 1 cent per share, compared with a loss of $17.9 million, or 37 cents per share, a year ago. However, adjusted earnings of 10 cents per share were double what Wall Street analysts were predicting. 

E.l.f. generated nearly $75 million in sales, marking 13{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} growth from a year earlier and outpacing analysts’ estimates.

Back in March, Amin warned that despite the company’s China manufacturing operations and U.S. fulfillment centers coming back online, the broader slowdown in foot traffic among its retail partners was beginning to weigh on sales.

“It just reflected the behavior at that time where even if consumers could go into a Target or Walmart [they] were really prioritizing essential purchases,” said Amin on Thursday. “Since that time, we’ve seen the business bounce back but some of that we attribute to the stimulus checks.”

Amin said much of the company’s advantage also lies within its accessible price point, offering both makeup and skincare products at lower prices to the industry standard. 

The company did suspend its 2021 forecast, citing a cloudy outlook given the coronavirus pandemic. 

“I would say things are still very, quite volatile, and we did see a significant drop off in the overall consumer behavior and the [beauty] category really starting in the back half of March,” he said. 

However, Amin said he remains positive that the company can continue to perform strongly in the coming quarters so long as the economy begins to reopen as planned and jobs start to come back to the market. Digital sales, he said, will contribute significantly to its success as they did in this quarter. 

“Our overall value proposition and really good execution against those imperatives have driven really now five consecutive quarters of sales growth,” said Amin. “We believe our strength in digital, and our fundamental value proposition, should allow us to bounce out better or faster than others.”

Shares of e.l.f are down nearly 11{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} this year, though have surged 46{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} since April. Its quarter-to-date performance has outpaced main competitor Ulta Beauty’s 26{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} advance. E.l.f. has a market value of $721 million, while Ulta shares are worth $12.5 billion. 

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