E.l.f. Beauty continued its winning streak as it ended its financial year, blowing through Wall Street forecasts in its fourth quarter as its bets on marketing and hero products paid off.
Marking its 17th consecutive quarter of growth, the Oakland, California-based mass beauty company, whose brands include E.l.f. Cosmetics, Keys Soulcare and Well People, saw net sales increase 78 percent to $187.4 million in the three months ended March 31, surpassing analysts’ forecasts of $176 million.
Net income was $16.2 million, compared with $1.6 million a year earlier, while on an adjusted basis it was $23.8 million, up from $6.9 million. Adjusted diluted earnings per share were 42 cents, compared with 13 cents a year earlier and way above Wall Street estimates of 29 cents.
In an interview with WWD, Tarang Amin, E.l.f. Beauty’s chairman and chief executive officer, noted that it has gained 270 basis points of market share in the quarter and increased its ranking to No. 3 in mass cosmetics in the U.S., surpassing Covergirl, according to Nielsen.
He added that it was also “significant” that it became the No. 1 brand in the mass cosmetics category in Target, since the retailer had a head start on everyone else as it was E.l.f.’s first retail partner.
“It happened way faster than I thought,” he said. “We have an incredible potential just in the next few years to double our market share like we have over the last four years.”
He put part of its success down to its savvy marketing strategy, especially on social media, of which it has been an early adopter of several platforms. Earlier this year, E.l.f. also aired its first TV commercial during Super Bowl starring “White Lotus” actress Jennifer Coolidge.
This strategy is expected to continue during the coming financial year, with E.l.f. set to increase spending on marketing and digital investment from 22 percent of sales in the last financial year to a range of between 22 percent and 24 percent.
“We are investing even more in marketing because it’s been working and we’ve seen plenty of opportunity,” said Amin.
Overall, net sales increased 48 percent to $578.8 million in fiscal year 2023. Adjusted net income was $91.8 million, up from $45.2 million.
For fiscal 2024, it is expecting net sales of between $705 million and $720 million and adjusted net income of between $98.5 million and $100.5 million.
The earnings come after E.l.f. was recently named the 63rd biggest beauty manufacturer in 2022 by Beauty Inc, with an estimated $497 million in sales.
A separate WWD study of 104 global apparel, luxury, retail and beauty companies found that only 26 firms in the space beat the Dow last year, with E.l.f. leading the way, rising 66.5 percent. This marked quite the turnaround as at one point in 2019 shares fell below $8.