e.l.f. Beauty (ELF) 27 Feb 182017 Q4 Earnings call transcript

Greetings and welcome to the e.l.f. Beauty Fourth Quarter Fiscal 2017 Earnings Call. At this time, all participations are in a listen-only mode. A question-and-answer session will follow the formal presentation [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Allison Malkin. you. Thank

begin. can You

in Thank be fourth joining XXXX quarter of elfcosmetics.com. the is A everyone. elfcosmetics.com. section discuss recording for A earnings today XX e.l.f. copy of available release press Beauty and will today's Investor you afternoon Relations us of also for call to results. the available Good full on year days

statements, on including contains are and known management's may this relating in are and release a call forward-looking company's results cause actual and those today's may statements SEC projections. are outlook, that to the estimates, reminder, company's These filings. and beliefs and results the based Important those statements assumptions, to differ from XXXX factors by fiscal uncertainties expectations, As detailed and actual implied that unknown expressed year press differ therefore or risks to subject materially. forward-looking such

management non-GAAP Certain In and most addition, are refer the Financial GAAP presentation information measures. today's today presentation measures you differences includes the on company's comparable this release the a and from the in are reconciliation Tarang basis. on President equity non-GAAP to Officer. between of third-party and us With Amin, cited based Chairman John Officer; Chief settings. Chief Executive We presentation directly press Bailey, for brand a presented today and

a to It results alternate, over our the for my related and to session. guidance. For today's sharing typical our against providing we call, will Tarang followed progress will made turn be and and performance now growth additional as of with will Tarang. John call by to This overview the and Q&A begin financial us, pleasure is strategy the an details Tarang then

full results share took $X.XX, X.X% per XX% channels increase in Thanks and XXXX from Allison X.X% net pleased XX%. year XXXX. $XXX of to We an market in versus up everyone. earnings share year with of of sales million, XXXX to report ago hello We're and adjusted tracked in

see direct non-track strong our to made back, to beauty to well We XXXX, our since growth our also as including all. both in on channels, luxurious progress strategy mission as have in we growth continue accessible make meaningful Ulta Beauty. establishing Stepping business

four-year and Over growth strategy, net increasing for pillar the of over advanced EBITDA of we've X.X%. sales XX%, X.X% market delivering tracked period, a each our our adjusted CAGR at to and share

will perspective for foundation We and time progress the on created spend we've sharing we've call growth. on made this the future

a brand brand. Our beauty that enthusiasts a diverse is great first e.l.f. build is to young, love. strategy

years, In brand cosmetics from grew audience four amongst ratings from social program Beauty from by mass include consumer highlights and further combined unaided XXX XX% our points, the from members. past XXXX, engagement and the retention the any awareness to following Squad over followers X% XX% Over our XXX,XXX We we Beautyscape retention of XX leads to growing three efforts. and million now million, to and loyalty brands. increasing million, of XX%, our our awareness to ratings highest increased scaling value XX%. XX% unaided have value to XX XX%,

John pleased consumers innovation are that turn love. engagement brand I'll effectiveness building in on We a over it efficiency brand penetration. our both and and with efforts of to now discuss the to progress

Tarang. Thanks

extraordinary breadth lead to us is of of the at quality strategy strategy. our sets and is second apart from believe and innovation. value We linchpin other an Our innovation our brands high depth

able Beauty margins of innovation us Active the to major and items, lines. increased on we XX with the our we trends. year around products launch XX move were our care four XXXX, quickly prior of last we've Both progressed Shield Over improve of a from were over able average to to year, XX over initial including weeks significantly speed-to-market. allows and the first-to-mass. are flexible shortened years, launches XXX, year from launched to weeks, our weeks. average in to skin XXXX, expansion an continued market from We how A the were our of our XX approach our to XX%. to online gross also that increase XX time was of XX XX% innovation from past our XX% from great XXX previous In In of new down of to idea focus go examples selling area weeks

channels validate approach. Our our fastest with direct a through launches new significant took XX weeks. our our advantage quickly ability us items to in innovation provides We believe overall

strategy third brand is to penetration. expand Our

at e.l.f. double-digits we share Walmart Target traffic. from last both have stores space in expansion grew unit with the three share XX,XXX. XXXX. to saw positioning continued multiple and share been In get the markets we became retailers four presence at we've continued to national the dollar our over one expanded feet space. e.l.f. At number linear XX.X% from store customers Walmart. where around retail store leading shelf major to years, count long we sales number more one Over brand, digital in share XX and at and Both more we've sales In our also doubled We direct XXXX, XX,XXX Manhattan-based our our Target to than in prominent at business, in grown grow and brand, XXXX.

In addition, the chain-wide is first performance Ulta our XXXX. that leading expansion Beauty we're pleased during at the of half early

to turn our operational business I'll direct of three it the digital also strong opening back with new growth improved and discuss progress. our Finally, to stores channels. Ulta across Tarang exhibited now presence

Thanks John.

starts business. is drive and the over team significant strategy four in world-class years the which our to people. investments past with to world-class operations, We've infrastructure scale fourth Our made

is female, XX% We diverse, diverse are that proud enthusiasts and that we beauty over the the team, which XX% reflects XX% young millennial, serve.

the the and over results, operational on-time, the to horizontal including first-pass our have XX%, strengthened XXXX, and increasing back we In and best period of years particular. of to outlook. results progress team combination summary, our speed our customers XXX%. rates XXXX have this increasing supply operational and that We suppliers. to quality with XX% progress made penetrating our dramatically and I'll the improving we four our now turn good last In to John quality, it in integration also fulfillment Our cost, chains XXXX improved, the and we on in our further with in industry. over strategy believe discuss in-full financial from

Tarang. Thanks

with consistent expectations are provided in early results we XXXX Our January. the

$X.XX million to $XX per to innovation, or Gross in $XX costs, or customer the percentage $X.XX of million largely an a XX%, million XXXX. post-IPO. of share that tax or customer share, share XX%. $X.XX $XXX On Adjusted sales and mix. exchange, million, was that increased exercised partially expanded EBITDA with number returns, include I options in from to employees reflecting $XX our XXXX. offset growth a a of net For primarily per coupled driven significant to compared million foreign figures year, million note the improvements compared sales basis, SG&A freight as $X.X net across in $XX full Adjusted was a result business. is margin-accretive per benefit margin XX% of income XXXX XX% adjusted strong by as by

that and delivered results, headwinds. margin in net strong XX% our a sales EPS category been XXX of points has growth of over growth, XX% adjusted basis having XXXX proud experiencing are expansion We gross

our of we EBITDA expectation XXXX, CAGR outlined on strong to basis net in In growth to our results XXXX XXXX. XXXX net XX% and Turning to a X% EBITDA this XXXX. an annual growth of sales Consistent includes January, and outlook sales X%. XX% for adjusted and compound adjusted from to with for

we cosmetics our continues generally XXXX. assumes While the mass to overall forecast category headwinds the experience build throughout outlook account-by-account, that color

XXXX, have merchandising assortment foot, our of insights coming those XXXX. of per secure existing A in increase expanded the and expanding space assumed footprints. specific into then optimize minimal new space national number optimize part shelf retailers from our incremental Given SKUs opportunities expansion qualified channels incremental items the and We core in we to e.l.f. on direct our shelves. and our to noted leverage proposition in flow, significant at overall of XXXX to more is further space

which these many partners. spring for midst the We resets, process in are currently of our retailer in applying national are of learnings during

guidance have Beauty to meaningful terms further is are announced. impact the changes In the of have productivity months. made We retailer Ulta we embedded our national of previously better expect only coming in in existing the focus a Therefore, our optimize distribution, sense the national in of new doors our the we summary, stores to partners. within in XXXX, retailer new

made Over gross have last progress few significant we margin. the on years,

will be a the with from that to While margin exchange back U.S. benefits the perspective, advantaged rate gross with our into through to to to that we saw reinvestment SG&A the profile I'd XXXX, XXXX. consistent and the drive dollar algorithm. margins that we to approach we into become continued RMB continue Sweeten headwind benefit an our coming From and assumes a in savings cost innovation expect XXXX, our business year. pleased outlook in Mix our margin expect we're note similar to expect

digital our in areas While investments e-commerce digital to will to continue our infrastructure, the earlier improve loyalty marketing, site content, of example experience An leadership people, new year, functionality. support personalization and and and and our brand, the leading expect plan specific we is consumer continue increase retailer.coms. thematic impact. be digital brand in presence launch XXXX our e-tailers as investments to to the which and our platform mobile this the same; We deploy behind

in continue we As to a that brand, to is native digitally on areas. strengths it these important down double our believe

approximately income XX.X net $XX figures count $X.XX and are adjusted net based to XXXX, couple in million pertains There forecasting of tax translates to we respect U.S. rate. These it rate significant of to a with for to adjusted a EPS are callouts share our a tax $X.XX and million. as adjusted on projected XX% Finally, which figures. we the $XX EPS reform beneficiaries the income, as income assume of federal important are to of movement and million

number the tax options as post-IPO. from saw period, we XXXX significant employees First, exercised option benefit exercises in stock a of

mentioned to $X.XX or As translated in benefits per XXXX. million share $X.X these earlier,

While difficult benefits future, they're in to we may see inherently the further forecast.

Our no guidance from these XXXX. awards assumes in therefore, benefits equity

pertains in of place callout first that XXXX. change a would methodology take to second the The quarter

associated over XXXX and some impact remove amortization adjusted to amount income This turn outlook included Specifically, net in to the going I the the TPG related forward, our to provide we to is and in intangibles thoughts. Tarang million. it item adjust original our of reflected will net change tax is figures final of adjusted income XXXX the acquisition. will $X.X

John. Thanks

and progress to-date, the ahead. we've with about brand. the driven discussed, significant As Even four value over I'm tremendous last creation whitespace growth years, the encouraged e.l.f. in the

provide me examples. Let a few

great the of have continue opportunity one We in an to beauty. brands build to

come, As we've far XX%. unaided as only to awareness we legacy brands around relative XX% have still

some Given our category, we further in have of efficient retention tactics. we believe rates engagement scale the the can highest we

make In investments community. Beautyscape we Beauty additional digital Squad, to e.l.f. addition and larger, plan loyal to build to a in

also trends, believe speed. to applied We can be can innovation capability brands. output we and industry-leading This improve and our further innovation new segments,

believe has For larger runway, that global example, even skin our cosmetics. than care global care great portfolio evolving skin color we with

penetration. We have significant opportunity to expand brand

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ability leverage digital in growth see We with continued also partner to to customer.coms. high routes our e-tailers

markets in the our early and the in are the Canada, deliver resonate international U.K. of having focus Mexico, strong expansion, and of We still brand results seen days initial

the years, creating we've over four operations. Finally, meaningful last world-class investments in made

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Instructions] your [Operator first Wissink time, from question-and-answer conducting with line of question Our this question. we'll comes be session. At Please the Steph Jefferies. from proceed

afternoon everyone. Good Thanks.

the John, tax on quick impact clarification, of and the amortization ownership. a from the removal first, Just TPG

you guidance? That roughly in think or is from EPS? earnings. qualified excluded million Or to $X.X I is that embedded or that $X.XX as so your your EPS

Steph, For XXXX, correct. it is that's excluded,

you about then talk just think we skin shelf about can think, care comments gross XXXX. on like in about the basis? year on on or with that question, comments a on some regarding over your we of existing optimization the space think your with around the margin how should portfolio, care? optimization And Tarang, gross And respect basis? last is so. excitement to mixed that I you Okay. an flattish my then broader margin how skin it should picture, opportunities earned But have It you've kind sounds

what core I'd say new. isn't Steph, which really it to is comes approach, back our Yes, so

on care specific item, we sub bit. that out items outside really the And particular our but up go sort the a and do AUR it mix items new in, segments tremendous items, So the find driving often of we're new are is wall, like mix entire of way in that's across any out introducing assortment. values, that skin that the take process, that old

year Just the to sort the to and to walk, tremendous obviously, expansion gross of the seen margin point over X,XXX in on the basis four the XXX put finer of XXXX points business last tune we've a years over last in alone. XXXX

continuing a headwinds, have extraordinary the offer margin FX, to the take Headed form XXXX, as mentioned, Sweeten between innovation value mindful of through but broader also but in to XXXX. the was to XXXX we that we benefit, a and in actually balance that always approach. benefit that looking anticipate a will some of be be for consumer, the to opportunities to in not want we So, do headwind do that we be into continue, numbers but specifically to that Mix

Steph question follows on I'd well. add on care that And what care. your Skin very skin model

unit are skin an average items value. still care, higher are While retails of on the those each extraordinary

pleased approach on and mix the our to to progress. out, is as the so with been we innovation overall our company continue margin-accretive it's been And that we've

Thank you.

Our comes next question Please line proceed from of Bill with SunTrust. the Chappell from your question.

Thanks.

a you kind go, understand industry you -- at can and that's at a the so algorithm? John you over for within about guidance there's it, shelf this year, trying growing new year unaided or changed that's XX what's go, of what still take still awareness a stage comfortable grower so to million kind in much you're in to if you much or Or single-digit talked the us industry, just step so and the you double-digits? are to both understand changed much when space $XXX now of a products? looking this months and Shouldn't ago you past I I'm maybe happy back For be still that then that Tarang, are had with did revenue comfortable at month to $XX billion-plus think you're help

Sure.

we Bill, give as delivered years, So, over over XXXX, category we've growth, the XX% we in comments, I'll CAGR. delivered perspective. Even XX% last headwinds. the said despite sales in Overall, our four

ago, CAGR we XXXX a So, is XX% month to as -- talked and our XX%. XXXX to about

single-digit been history We've grower. than a has not So, much we're -- better that. our

XXXX, me to he John to let talk about drivers that. of can terms and In it over turn

for obviously, you underpin on XXXX the single of as Obviously, tremendous Yes, I'd the a whitespace XXXX, category lot digit a about mentioned we long-term, Bill, guidance the this in to brand. that. what I few we we we about continue drivers think and is that that mean in tell inflection talked see

the all, of category continued First headwinds in itself.

XXXX shift that a that in underpinning already actually business Second pipeline of of and about all, we drivers outside number last new available that and this in baseline distribution of over the doors, year. as to are for lot space, existing within time we very have announced of that those drivers think accounts little the us expansion across of we've in any new generally, Ulta Ulta

So, we number, we broader that us, drivers opportunity to at why that for look about. take set to have available and of that but talked whitespace great are a are see relative where that's still think come you we the years the kind to we new numbers the growth XXXX we

more of you're rate and So, just you -- look Ulta sure said at it XXXX XXXX permanent level, you recently, right kind growth focus getting more It's this of don't at new as kind paraphrasing way a will I is on normal. wanted so, -- that and to you grow that really make than think look a necessarily the specific right and and it? follow-up, is of the that year that -- to to had

we've able terms Yes, specific of think we're for happens quantification in to look, long-term. I what probably or given XXXX what give in

For I of paraphrase in within doors. getting really a bunch accounts bunch optimizing the that it's We're new not in me focusing XXXX, and opening a new think on within execution would us, doors. that space the that we're we're be for the Ulta about not and of

to in X% And that category rolls up to X%. tough so a dynamic

Got it. Thanks.

comes your Co. & Chen Please with with of Our Cowen the question. line proceed next question Oliver from

Hi.

opportunities Regarding categories prioritizing existing you're should about Thank opportunities? in biggest doors, you. the productivity also most about you what those which spoke some the be of excited optimization when we and are see within terms as where think as you shelf And innovation of to of categories, you flow?

Sure.

from getting on has So, the on the been optimize all along the our space, our based productivity, direct get we're model the channels. insights space

launched we last items XXX year. mentioned, we new As

as the now is of some right in been collect, a of learnings what as reviews lot on we've both is of the first here that best the spring able during to opportunity terms So, are. resets. -- one those sales is we best to items And our well have apply data

So, our as items new next couple items? we last the we those over year What as new from How some You're go qualify did months. learn of doing? on start through kind of picked we of shelf space? going see that what are up did to to we

I behind think of in is their Target when numbers should terms their coming Walmart pretty resets. went terms through soon first how they doing. they're in be that did of so

new able said, standpoint, the from I the be that of you'll items as couple a well in months next what both see so does And to as productivity as here.

product record of track say, terms we tools care. eyes, In a categories, lips, face, great skin I'd have innovating of and across

I about. the think in given us for launches, retail one is of off coming of in Shield us. see skin is now pretty we're we'll particular, excited of last Active particular, And year, tremendous line. big of the both and we in is can I'd and to a those, area other run numbers say One those. our rate the of some that just see care, start two focus ahead see again, Beauty you again, And

a Okay. follow-up. just And

and Beauty to understand? speaking nature the Regarding job there's us you headwinds would should or of of about channel a what articulate Because of helpful what the this, versus the on categories. product you've temporary the headwinds the lot investors temporary very a in done depending crosscurrents terms not and in

for factor? we love should you to for about risk frame think Just that up how

consumer, consumers, new the and over one it categories And fact, this the Beauty, with in do point is you all view we period CAGRs with in a ideas of in the all if given in love importance category. of plays our products. a a time, as healthiest not look take at along so in structural their long color of long-term Yes, it's see issue cosmetics very the of new

from hey, our direct So, at last And skin we would or baseline of up, just the category? If of That noise -- approach with channels, the come is assume that is cetera where we a see, in that, establishing we very feel you'd own dramatic kind that cetera? I see of headwinds? space, do the think trend. let's to we data, it's X% we clean lot But et a in a when year hey, see where particularly to the look anything et pick category terms we where that Having said, is long-term in change good said there. was change Where door we upside of say continues. there category a are X% the terms this baseline. up not of, a wanted data a

Thank you. Best regards.

of proceed line the J.P. from Andrea question. comes your with question Morgan. next from Teixeira Our Please

Thank you.

I So, another EPS, of so clarify math exclude EPS, we in to adjusted base $X.XX. XXXX the the for plus the of want $X.XX of need comparison the to terms amortization intangibles from just

to would within of So excluding $X.XX And so trying when of part you plus press the for be to fall including to like, your you would release to just, X%, reconcile that the I'm guidance the to had from that $X.XX? that, that the margin, $X.XX, say are of in gross $X.XX increase are base? or that, guidance. reserve related in from instead alluded related X% terms base, also to increase, that the you like, then then you you inventory. the And you EPS had

to you'd goods you're have sold to changes reconcile if your of what inventory returns you. so So, having or wanted if in that write-down? just that related you're having is to Thank I

Yes.

the I'll adjusted So, happening with EPS. major EPS things Two start adjusted in first, numbers.

a first in that The $X.XX number. benefit a that therefore, from which and is resulted, stock benefit benefit that about option significant XXXX, in is is saw exercises tax we reflected the XXXX

are in to haven't those tax benefits difficult We forecast. any very forecasted XXXX because

So, see to be XXXX if the to that upside we would number. were benefits

XXXX EPS going million normalizes tax actually and in will in figures figures acquisition to intangibles amortization benefits. relates $X.X XXXX is in associated other TPG is through which happened the from QX income set adjusted reflected of net outlook reflected a methodology that yet, of the XXXX. That amount in the net and results, the adjusted the the hasn't to The related for change, but that be

of is the margin, the base. what adjustments about change because the made amortization we're I'd over through last XXXX, points not that proud you, years have respect even in the that There and improvement. methodology yet. is base think four gross about basis we quite we've to XXXX over how gross gone XXX tell no to With Andrea, the margin that's progress of So,

history continued Mix Sweeten During FX, and driven our initiative customer offset each little year in the to by conversely, about this have of talked at given the and XXXX, of every QX discount which any in run and by call, that mix. was expansion, we business, front-half volumes tend that discount about obviously the XXXX, And less in customer year. pertaining we bit mix was volume than to we sales in very talked a X% of weighted. that said very weighted it back-half We

heading a QX, one with to that, margins deal-driven you relative that not. overall our we And approach going is and came discount of our have either say in in time, from business nuance ended off tends expectations. So, discounters, capacity instead to I'd very in given perspective, of be The writing or pretty million point inventory. can into channel our that reserve consistent through up $X.X in kind any of

So, very through that off we come wall. items with the how consistent move

Jon comes your Our the Please line William Andersen question. question from Blair. from proceed of next with

Hi, Tarang, afternoon good John.

Good afternoon.

an visibility for fair there's to calendar to the year the have of that terms door here. doors? activity will which as and you no year, not I that about in space that whitespace this bigger the incremental and beyond is plans good that's retailers ask be in space are doors. look are like accurate, that expansion assume how you've maybe there So, then sounds incremental question, second some part point wanted set space it ex-Ulta, Thanks. if guided say thinking space when and or you your what door -- you XXXX, at to And more optimized and with

which previously retailers within what kind how items two there to XXXX. X% if a Ulta the additional of our profile, consumer terms with is of the on, our which of what us guidance underlying retailers What the and have, tell opportunity there's provided standpoint. the at a was was rollout productivity, Beauty. whitespace for We X%, is look in things from is from doors space brand John, our we ahead new of focused we I'd optimizing plenty still is take most proposition in you our of So, total you space resonates space in assumption basically announced our a are and existing and the

if they I goes approach I is think we baseline. people our landscape, last the is, are term, Walmart the we are legacy the of now at get used left our that within we year additional in I on. whitespace no, is still talking the year of then year, tip positioning of in we the still the days footprint something, your Walmart. early we've kind kind as this behind figures that we say, still have ahead of I'd to predominant and a prominent is there where space still major Ulta entire four-foot channels time and we cited Target brands more and brand entered areas number? as to we time in have think that half to embedded of is the all our there. about are went was touch dollar us. I announced of rollout we're within number have of set, drug, addition what store, said, years Target every And have share learning leads was, look that and time kind we'll about is if we focus that, additional space news, that Long add that four And a news and kind -- the that addition like, the set. where we three of Every

before So, get international in we and opportunities the that's just that we to have. U.S. other

follow-up. of of shipped to four-foot Can the much status To Ulta? our is some come? noticed update give extent One product We've sets what How us helpful. of the have you you in the on left quick That's kind region really an country. in fourth quarter?

where some are of already showing? sit kind you've the Thanks. and on an we Just what incremental what update seen of results and benefit

Yes.

their in So, of the Ulta rollout. is middle

we in we've to a As local progress quarter. did through XXXX, of you be that out lot as going go the your half happening related but that's that mentioned, saw pipeline is market, been to making I'd the the you rollout, of fourth What tell in good first Jon.

we'll I'd the we the see did benefit a of replenishment that Again, while out from at stores we're early with just in secured, retailers. don't quite we're mention pleased that But a that certainly XXXX So, very comment go we've XXXX. initial excited. Ulta. days lot in specific fill on new

Thanks.

Fargo. Our line question Bonnie proceed Herzog from the Wells with from your question. Please comes of next

past, acceleration first Walmart. wondering Thank the in verify, earn next guidance, the the have wanted gotten guidance? space then expectations then tracked why on need in like into had seen talked your both incremental growth are about And category data. Nielsen I an I over then Target I of And at we the channels the baked in to is of that I long-term? your the you category you and space, for guess it. you've you. terms a scanner year, feel optimize I'm guys haven't sales guess I from to growth shelf the level what what question

the to data. Thank of in why reflected when begin to the not in So, space? new and we're your could seeing when just understand optimizing wondering you. trying Just the begins sort phase optimization this success we gauge

part. to the let take Sure. the I'm Bonnie, second. first going Tarang I'll Hey John. it's take

I'd not category mature tell business, Obviously, category, we on then our the plans and a for dynamic is, taking growth So, that. and build bottoms-up a share assumption a off grower. you our of versus account-by-account assumption first XXXX, the what

bottoms-up to what it long-term. something I tell in we're tell versus not What view. similar to be alluded and big not, XXXX what that that is you continued the any much better the overall mentioned, to view, the sustained plan. is recovery was that is is in in the headwinds you underpin over think I our So, that's approach category structural this Long-term, going Tarang which I'd and our we would generally in the commentary, assuming in speaking,

many, in places in given grower. cosmetics, cycle. over very mass back yourself been look you time, that the years these periodic a it's you will particularly various you But consistent pullbacks, many find color If have

So, XXXX, don't this that sustaining give would to the other long-term. we have or specific perspective over we guidance don't see we say beyond than

soon, first question pretty and second next for rates in now. to able you resets those we ahead start space read you of of that your month we Target two, to will is the the Nielsen as to seeing customers. earlier, benefit in amongst -- optimize in picked are the in highest mentioned that starts you tell the going and on business. year see everything gain to then customers. right the by on up opportunity both about just data, followed be in and category terms that that because I while shows sell-through bit both take at expansion. seeing our Walmart Nielsen when XXXX, you'll were Target space perspective, our to that spring probably you year this optimization, of talk, last Into at at happening able even their can is of that which probably see you, the and and when won't would start then real And so what other that say, the of little only in covers two-thirds resets the benefit customers, start benefits at I see what's share I'd that both And Walmart or double-digits, over a space Walmart Target And we the model space

will of Ulta vector international, kind is for a us. which to also own certainly, business and our So, direct exclude continue growth Beauty, exclude, it

you. Thank

proceed question of comes Erinn from next Jaffray. Murphy Piper Please with your line the with Our question.

channel you're and Great. what afternoon. in the answer the you in seen question it broadly? over your reference was double-digit on talked Thanks. to I of Good Is curious, the you've you prepared drug actually the at the last Target just or to seeing relative remarks and average? Can in under-indexing Walmart. growth kind

Yes.

of a the for for or lot of channel Walmart There back of I support integration chains on XXXX So, for they've challenging as it year -- focusing example, with their other was in the was, color their I other think I with cosmetics, drug -- a brands merchandising CVS quite Boots integration that busy drug in the from well, the was channel, overall. Walgreens seen. in mean Walgreens. areas Boots pulled know, that acquisition

of drug I'd drug. kind say feel would a I year available doors we have good a within we still drug how number within as and So, of transitional characterize a stack when to opportunity the take XXXX probably say of as channel up and kind we a us, look overall. I'd tremendous at about we

had Walmart, linear Any see Okay. unfold? of there? you now And footage at the resets kind think, are from improvement -- the then started the you sequential that I starting end year, to the of have to of expansion, XX% with

just echo reset which I'd said, that Erinn, is in Yes, Tarang still what early we're process.

the much a coming or two. of have that we'll So, view in better month

newness. Okay. And just last question the the then of on pace

year launched, type in that to sustainable you. we terms care? products earmarked what that's towards in guys it of care, the of more is. more is of fewer terms skin much of should Or think, products skin see Just maybe XXX. had new Thank of stellar trying understand level I You a kind how that number the going new a Is forward?

sure. Yes,

in We I'll to the particular what launches. our of kind that our I last our do of number target say this innovation innovations. we're -- to are how quickly be to XXX so a have point ability wouldn't So, really to year, capability year. have in for. to and is are our terms first-to-mass innovation consumers couple things A able we of looking did talk we many XXX we Whether going

do, The we all previously last things make amount I'd which to three incredible have in what in core the So, that at is terms the Having of say, Active. in focus. as we capability not of items at of speed and items -- launched great we're continue Shield output particular, that at able ours things consumer able on that, kind that that all launch in we're the and our said terms to launch. beauty they're which have and items big XX I and Prestige, needs can being of those luxurious will of to are time, of the to so is of that be our addition marketplace also are only available really major we year the number able areas similar of have and think, on, focus available same were types things those, of meet to to I accessible kind think our examples in one Beauty

Thank you.

your proceed comes next Our question line question. of the KeyBanc. with from from Jason Gere Please

Okay. Thanks.

lot follow-up, we've just category. one out a wondering landscape maybe talk of mass Just you on the about -- Revlon Coty relaunches some and there -- your of can if heard competitive the that kind doing about some

So, you And of the the that a I awareness do just business there. couple of Any see of route other that some from brands up, guidance you next impact think years? of of levels some you. terms used to may thought to they second the today. drive marketing how think direct-to-consumer these in unpaid are getting wanted be going to in about when that especially terms us enthusiasts Thank what of had you unaided trying you've provided the the of could brick-and-mortar have out that, you kind into and the guess, traditional big seeking? -- How type that then And the the standpoint, question, over business.

tell the horizon standpoint, our look I'd doing. competitive take a look always take you what kind a and are at competitors a at of we from So, what

going our helping for steal approach from how plans and kind The kind we our and our we customers about of of way We of have build kind of the a share less lot category. ahead it's us, we respect to competitors. build do whitespace their of who

anything which the do taken So, would concern particularly legacy category brands that are it successful. many from our speed model. view always continue innovation of an I've versus We in hope appeal I that there really ones us. brands, at for though that us that particularly an of of fact, I alone. And and always the more engagement are us good isn't which driving and point to looking kind different of appeal them be we'll standpoint, that's any really from that ones to and in the believe take

even to I from of on and approach additional able build terms cited we effective, build -- love to the highly the how figure an and to consumers. in last that in years in see, consumer second, X% engagement and unaided the we've from our approach awareness four our XX% go unaided able we we're that efficient importantly, that's more been XX% awareness, The XX%. to being three to an with awareness to really drive in continues We authenticity have XXXX, unaided points able

consumers lot we're So, test in able on sense, to to we're so looking a we say now. the never the how say any a we and learn consumers approaches way makes always but approach we're I that a would of efforts way of of and different we right pleased we're really on never at we're company do particular like number our engage with that that approach, Beautyscape, but reach

from from Please comes the Astrachan proceed question. with your line question Stifel. next Our Mark of

sheet, clarification, be million wanted balance good inventory think, that taking in would then afternoon. so the the Thanks I you already write-down, John, would a write-down come, said, first. I reserve $X.X that there's inventory happened. the reflects which had suggest that more to and fair? Inventory And

write-down. the taking No, the was reserve effectively

they're and So, same. one the

So, does the which balance have would that balance. that actual inventory reflect reserve, inventory lowered

in different you think And been think What you out -- comments hear thoughts expectations XXXX, it? a the about own what guess, putting responding Okay. And broadly, not that any customers to from store, sort an for with what light, A&P your support, do slowing shelf on given of shelf lost or in then of hearing how from of terms terms absolute any on they taken I have but are being do category to and your you? customers you you had? space would in questions more of has reduced just retailers, are like of you the some overall your space

lot conversations from engagement say to having I'd socially-driven difference really those of and consumers continue absolutely on think or And in consumers. retailers question I approach. no terms able We've -- that. your and leverage with mark, for us our tactics continued A&P, retailers really to been Yes, digital around same strong appreciate we're seeing a of our

in go XXXX, think the about SEC X% A&P conversations with as it retailers no sales, in So, to the would the around do. out around way and what our need we change change that it us tone report and of or was no in we still has

to And on on your second space. shelf question, gain continue We'll Mark, space.

seen doing little current with the optimization a very existing of each our Walmart right and haven't about now Target a I in any our retailers. We're at talked in we're and losses bit any those We retailers. position of core customers. strong

of the If whitespace consumer taking key the you innovation, for of one our these brands us. we and we're look retailers, at ahead productivity profile, take the share, a go-to us just lot have of a and

us. of bullish quite still whitespace So, on of in terms no, space, ahead we're the

Thanks.

Linda Davidson. Our proceed next question your Bolton-Weiser D.A. of from comes Please line from the question. with

Yes, thank you.

you maybe the the I So, growth the four to XXXX? quarters on things recall, comment fourth some of there for some shifting quarter, gave through first of quarter. guidance seem could into the when cadence was sales of you

across the assume or equal four of So, slightly should is we sales growth the higher quarters? rate a kind for first quarter it

Yes.

first any moves, is always programs, which our setting therefore, So, timing the of public still are I that the quarterly late to what it see merchandising the -- company, quarter-to-quarter. There's of growth guidance just very your big rates provide our process the were would in of resets, quarter, vary To terms provide widely come back happen happen dynamic a quarters. that way on Linda, given year-to-year quarter actually And things from that actually business. I as we in look to we've if those question about about only think that pretty you pipeline a on so the can history bit the found difficult to that little back much in thing that specificity quarter. can Tarang part our core pretty of find nature a their between and spoke you in and don't is

from benefit probably in those So, anything products a And with out of new headwind we're that of than else. stocks more are sitting fact, walls. as see and marking through not products on to any going there significant retailers they're the replenishment

in quarter, So, -- than higher the be significantly I wouldn't to forecasted be first what we for expect the year.

just follow-up. And as then a Thanks.

my then you of the more understanding XXXX mathematically report your a to the additional over get growth does get you to algorithm correlate three unlikely high-teen sales growth of and growth in any in So, in that the shelf X% algorithm? terms years, space don't event that to to in XXXX, three-year the X% rate

the The not this only I'd you at XXXX. rate outcomes levers. a giving into What is we X% growth tell in to probably a it there X% call, just XXXX are thing those we're of a that on leave the is on see plan different I'd XXXX year opportunities opportunities business various baked and year. This XXXX say of is a lot a doesn't in lot by obviously, that. continue this of to in to guidance implied variety XX% with the from XX% Obviously, to see

closing question-and-answer we end the and Ladies of the gentlemen, remarks. have I to to call for And reached like Tarang session. turn the back now over would

I May. day. a joining discussing hope thanks, to again, in Well, Thanks. great QX has for our us. look We forward really results everyone

concludes conference. This today's

Thank participation. You you your this for time. may your lines disconnect at