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e.l.f. Beauty Announces Positive Earnings and Shies Away From China
November 3, 2023
e.l.f. Beauty has announced its earnings and expects to further increase sales upwards of 55% to 57% toward the culmination of the year.
The company’s sales jumped by 76% compared to the same period last year, surpassing Wall Street’s estimates. In the fiscal second quarter, the company posted earnings per share of 82 cents on an adjusted basis, sealing a victory over the expected 53 cents. Revenue also exceeded expectations, with a figure of $215.5 million compared to the anticipated $197.1 million. As a result, e.l.f. Beauty’s shares rose about 9% in extended trading on Wednesday.
The company’s net income for the quarter ending on Sept. 30 was $33.3 million, or 58 cents per share, a substantial increase from $11.7 million, or 21 cents per share, a year earlier. After excluding one-off items related to stock-based compensation and intangible assets, among others, the company reported adjusted earnings of $47.1 million, or 82 cents per share.
Sales surged to $215.5 million, marking a 76% increase from $122.3 million in the preceding year. Sales rose by the same percentage in the preceding quarter.
e.l.f. Beauty also boosted its full-year adjusted profit guidance. It now expects annual adjusted earnings to fall between $144 million and $146 million, up from the previous estimate of $125 million to $127 million. The anticipated adjusted earnings per share are also expected to increase between $2.47 and $2.50, compared to the previously expected number between $2.19 and $2.22 for the full year.
CEO Tarang Amin attributed the company’s successful quarter not only to an increase in marketing expenditure but also to factors beyond effective advertising.
“Our value equation, the ability to make prestige quality at these extraordinary prices, our holy grail innovation, taking inspiration from both prestige and our community, and having products consumers can’t seem to get enough of.”
CEO Tarang Amin via CNBC
e.l.f. Beauty Avoids China as Part of Global Strategy
As part of its global strategy, e.l.f. Beauty has decided to venture into new markets, deliberately excluding China, according to Amin. The independent cosmetics firm, revered for offering affordable yet fashionable makeup in drugstores, ceased its modest online operations in China early last year due to high structural and distribution costs. The company has not reconsidered this position, as stated by Amin to The Wall Street Journal.
Amin emphasized that there are other markets with higher priority for the company. Although e.l.f. Beauty manufactures its products in China, it has no retail operations in the country due to unfavorable economic conditions for mass beauty products.
The company has cast its eyes on Western Europe for its next move, following the successful launch of its products in Italy via the German beauty retailer Douglas, which maintains approximately 1,840 stores spread across Europe.
Simultaneously, e.l.f. Beauty is also reinforcing its local presence in the U.S. by enhancing its distribution strategy. It plans to expand its footprint across the nation with the help of retailers, including Target, where it continues to be the best-selling beauty brand.
Amin noted that the company’s digital sales saw a significant rise of approximately 75% during the last quarter, and international sales registered a robust growth of 157% year over year. Moreover, the company’s skincare line, a hit among younger consumers, also surged by over 100% in the same period.
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