Following a positive fourth quarter that was slightly impacted by coronavirus, E.l.f. Beauty reported on Wednesday a net sales increase of 8%, to $64.5 million, and gross margin increase from 62% to 67% in its fiscal first-quarter 2021 results, ending June 30, 2020. EBITDA also increased by 7%, to $15.5 million year-over-year.
According to Nielsen, E.l.f. was the only top-five color cosmetics brand in the U.S., based on dollar sales, that was able to grow share in the quarter, gaining 5.5% of the market or 100 basis points. While mass beauty sales have slightly improved to -7% in the four-week period ending July 25, legacy brands continue to suffer. Maybelline saw losses of 21%, Cover Girl is down by 21%, Almay is down by 46%, Revlon is down by 17% and Rimmel is down by 34%.
“I’m really proud of our team during this crazy time with Covid-19. We had really strong results, and they are directly attributable to our five strategic imperatives,” said Tarang Amin, E.l.f. Beauty’s chairman and CEO. “We had strength going into the crisis, but our strength in digital and overall value proposition has continued to shine through.”
Amin said sales on E.l.f.’s website experienced triple-digit growth, increasing from 11% to 17% of business in the quarter. And though brick-and-mortar sales continue to experience volatility, the company’s top two retail partners, Target and Walmart, have stayed open throughout, and E.l.f. has seen growth on both retailers’ websites. Ulta, too, is now fully operational after temporary quarantine shutdowns.
Amin also said that the company saw benefits in the quarter from government stimulus checks and ongoing unemployment relief for customers. “If you look at our core user base, it’s mainly women who are younger and more diverse. While the economic crisis continues to be challenging, we definitely saw a pickup when government stimulus checks were sent out,” he said.
On the heels of E.l.f.’s ongoing ability to take market share from heritage brands, the company announced it is launching its first incubated beauty brand with Alicia Keys. The brand, which is being developed with dermatologists and will be cruelty-free, is expected to launch in 2021. Keys and E.l.f. have been working on the brand for nine months, said Amin. Prior to this, E.l.f. acquired clean beauty brand W3ll People in a $27 million cash deal in February. Since the acquisition, W3ll People recently went through a brand refresh, said Amin.
Keys notably gave up makeup in 2016, so her credibility in the beauty space will lend to E.l.f.’s greater skin-care ambitions. Amin reported that E.l.f.’s skin-care business has been growing faster than the overall skin-care category; in the past quarter, skin care accounted for 25% of business on elfcosmetics.com, and in total, it grew from 6% of overall sales to 9%. However, Keys’ line will span multiple categories.
“We’ve made a number of investments in our teams and infrastructure, and we have a number of capabilities that can be applied to other brands,” said Amin. “Alicia Keys is someone of real substance, and has long had a point of view around inclusivity, wellness, self-care, rituals and allowing people to see the beauty thats’s inside of them.”