雅虎香港財經 e.l.f. makeup brand 'one of the best positioned in beauty,' analyst says
e.l.f. Beauty (ELF) reported another strong quarter that exceeded Wall Street's expectations.
The company grew net sales by 49% in the fiscal third quarter, marking its 16th straight quarter of net sales growth.
"It did very well last year, but we think that they have continued momentum," Olivia Tong, managing director and senior consumer staples analyst at Raymond James, told Yahoo Finance Live (video above) ahead of the earnings release. "So we think they're one of the best positioned in beauty because they have relatively manageable price points and still a lot of market share opportunity to gain."
e.l.f. CEO Tarang Amin highlighted the market share gains in color cosmetics during the earnings call.
“We grew our market share by 150 basis points and increased our rank to the No. 4 brand as compared to No. 5 a year ago,” Amin said. “We continue to be the fastest-growing top-five brand by a wide margin.”
Amin attributed the glowing quarter to the brand's value proposition, innovation in the industry, and marketing efforts, especially as the beauty industry sees a post-pandemic shift in consumer spending.
From an affordability standpoint, Amin pointed to several "holy grail" products that have attracted new customers. For instance, sales of the company's $8 Putty Primer, inspired by another prestige brand's $52 face primer, have grown by double-digits, Amin said.
"We often get questions whether our growth can be attributed to trade down from prestige or trade within from mass [market]," the CEO added. "While we see benefits of each, we believe the more fundamental point is that our value proposition creates accessibility, driving category expansion. We have many examples where the accessibility of our holy grail innovation significantly expanded the number of consumers who participate in a particular category."
And despite the focus on value, e.l.f. also saw a boost from price increases implemented in 2022, which lifted margins.
"Those with the higher market shares, those with a lot of innovation, they can get away with a little bit more pricing," Tong said. "They can hold on to a little bit more, and people will be willing to pay a little bit more for some improved efficacy or ease of use or convenience or what have you."
Edwin is a producer for Yahoo Finance. You can follow him on Twitter @Edwin__Roman.
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