Company Profile
Founded
e.l.f. Beauty (ticker: ELF) is an American cosmetics brand headquartered in Oakland, California. It was founded in 2004 by Joseph Shamah and Scott Vincent Borba. The main products include bath and skin care products, mineral cosmetics, professional tools, eyeliners, lipsticks, lip glosses, blushes, bronzers, brushes and mascara, etc.
Note: e.l.f. is the abbreviation of the three English words eyes, lips, and face.
Features of the company
According to e.l.f. Beauty, its products are 100% cruelty-free and supports PETA’s fur-free movement. e.l.f. Beauty products have been featured in Glamor, Allure, Self, InStyle and Good Housekeeping.
Sales channels
e.l.f. Beauty products are sold in 17 countries and in multiple stores, including Target (ticker: TGT), Kmart (ticker: SHLD), Dollar General (ticker: DG) , and Walmart (ticker: WMT).
Business model
A good business
Competition in the cosmetics field is fierce, but e.l.f. Beauty has been able to capture market share at a strong rate in recent years. One possible reason for this could be its price. Management at e.l.f. Beauty said its average price is about $6, while competitors charge closer to $9. Lower prices encourage users to try the brand.
International market, the future of the company
Another interesting aspect of e.l.f. Beauty is that the beauty business is an industry with high international penetration. According to management, many of the company’s competitors generate more than 70% of their sales from international markets. In contrast, only 16% of e.l.f. Beauty products are sold outside the United States, which means that e.l.f. Beauty has strong long-term growth opportunities and the company still has great growth potential in the future.
Websites account for more than half of sales
More than half of e.l.f. Beauty’s sales come from e.l.f. Beauty’s own company website, which is also a social networking site with more than 2 million members.
Key acquisitions
On February 3, 2014, TPG Growth acquired a majority stake in e.l.f. Cosmetics. Joey Shamah was replaced by Tarang P. Amin, who “has been appointed president, chief executive officer and director of e.l.f. Cosmetics.”
In August 2023, e.l.f. announced the acquisition of Naturium, a skin care brand headquartered in West Hollywood, for US$355 million. The acquisition will be finalized in October 2023.
Competitors
Traditional cosmetics giant
Lancôme (ticker: LRLCY), Estee Lauder (ticker: EL), Coty (ticker: COTY), and Louis Vuitton (ticker: LVMUY) chain cosmetics store Sephora (SEPHORA) are the three major traditional cosmetics giants , is the natural rival of Ulta Beauty.
Online rivals
Including WalMart (ticker: WMT), Amazon (ticker: AMZN), etc.
Big shopping malls
Macy’s (ticker: M), Kohl’s (ticker: KSS), Nordstrom (ticker: JWN), these traditional large shopping malls, because their stores have traditional shopping traffic and crowds, are also Ulta Beauty’s opponent.
Recent operating status
High profit
Being a low-cost leader is often challenging. Therefore, investors may expect slim profits from e.l.f Beauty. But that’s not the case. In recent years, as its revenue has shown explosive growth, its gross profit margin has risen to as high as 71%, and its operating profit margin has been as high as 12%.
It’s rare to be a low-cost leader and a high-margin business, which is a good reason to like e.l.f. Beauty.
Cut financial forecast
On August 8, 2024, e.l.f. Beauty’s management actually raised its full-year revenue guidance. Previously, e.l.f. Beauty expected net sales to reach a maximum of US$1.23 billion in fiscal year 2025 (ending March 2025). It now expects net sales of at least $1.28 billion, an increase in financial guidance. But investors still reacted negatively because the guidance represented a sharp decline in the company’s sales growth.
For fiscal year 2025, e.l.f. Beauty’s updated guidance implies annual revenue growth of 25% to 27%. But considering that net sales grew by 50% in the first quarter. This means that the last three quarters of fiscal 2025 are expected to grow only 20% compared to the same three quarters of fiscal 2024.
Capital market performance
Stock price performance
Shares of cosmetics company e.l.f. Beauty (ticker: ELF ) have fallen roughly 26% from recent highs as the high-growth business’s growth rate suddenly dropped sharply.
Repurchase
Share buyback Cosmetics company e.l.f. Beauty said on August 27, 2024 that its board of directors had approved a stock repurchase plan of up to $500 million of common stock.
The company’s previously approved $25 million program in 2019 has been exhausted after using $17 million in cash to buy back stock over the past two weeks.
Related articles
- “How online merchant ELF (e.l.f. Beauty) makes money?“
- “Why Buffett bought Ultra Beauty, the largest beauty retailer in the U.S.?“
- “How Colgate makes money? and the benefits to invest in it“
- “Discover the possibility of super growth stocks in the civilian production“
- “Stocks Better than the S&P 500, Procter & Gamble (P&G)
Disclaimer
- The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
- I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.
