e.l.f. Beauty (ELF) 9 Aug 182018 Q2 Earnings call transcript

Greetings and welcome to the e.l.f. Beauty Second Quarter Fiscal 2018 Earnings Call. At this time, all participants 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. to of conference ICR. like host, to now Malkin Allison would turn over the your I Please ahead, go ma'am.

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

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

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

now John Tarang For is business to discuss pleasure then will action. financial the discuss our Tarang. today's and call and will It my call, context over turn performance guidance. the to

good Thanks, everyone. afternoon, Allison and

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brand show XXXX do While of turn impact and many John results distribution. and our XXXX outlook. to power over they and now revenue, space of continue I these gain discuss will significantly developments the to financial it to our not

Thanks, Tarang.

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partners, national single adjusted our diluted outlook, Turning $X.XX million, million to income the to adjusted accounting retailer XXXX. sales We million EBITDA EPS we select low XX our $X.XX of trends net are diluted outstanding shares. and of XX.X for revising XX expectations million in of current fully XX project to digits, XX growth on net now million to for within adjusted

data Nielsen XX% Our show of guidance to declines year-end. through average contemplates approximately

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shareholder like would focused value. We With addressing to the that, ask the are and operator to I highly for questions. open delivering current on call now trends

a have question We Wissink, Steph Jefferies. Instructions] [Operator from

just follow John, the to on inventory I comment. wanted up

it with you and the line like about down are in inventories looks I comment guidance. with pleased your So on think you're mentioned quarter there third progress

going us to So the some hold? that brand strategy key some back the the with Is into and the you that make can item Thank you. investment in you insight half? consistent the inventory of currently also give you're complexion of

Steph. Hey, Yeah.

line involve pleased have inventory We're a in been of and to year our with quite expected. of to can inventory the system. packaging which but launch coming, discussion of have as ago with Obviously, So those broadly, we topic Tarang really does Unicorn, composition it speak a or happy the yes, including relative see so we different levels. more brought Project a what

So happy we're sit. those with where

from is Oliver question next & Cowen Chen, The Company.

is This for on Ralph Oliver.

products? existing optimizing Project new kind In of taking of initiative, a the terms you and thinking about how guys the just step Unicorn just between mix back, are

Sure.

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flexible pegs. important existing relates The on second most is and But more to approach to We're able in more product be is allows efficiency. a Unicorn products it products where much fit shelf hanging greater as to shelves or the products new probably into shelving space. fit

of well, better it, space shelves retailers of of as their take including communication and of strength product kind carry items it we to so the will areas versus have. core new and navigation more same in that forward our that of some So a able our the existing allows new the for better even and if you be product think on at time, mix helps terms about into

is So forward we optimal on believe step important shelf. in terms really an total, getting assortment in of Unicorn moving that

savings, And savings. then secondly the the regard with leverage operating to

just to timing, or curious the if more you could would be also goes regard labor if Just detail provide that beyond there helpful. it with any just optimization Thanks.

to. Happy Sure.

business about over look going talk we've So our the operating into leverage as investments have those back historically been you a and areas reinvesting of quite few been the into, quarters. the of We last great a want increasing as additional bit savings ramp and And infrastructure a - talked dollars people against to efforts over that few see up we've years, the course into XXXX. level and last Tarang to an putting to opportunity the brand. continue mentioned, brand the really those lot then

to the In couple which a in a further a also we to and in initiatives that up even we're couple and free our to of mentioned couple our natural of of business, logistics facilities. that addition operating pursuing investment do really leverage relate Tarang have warehousing capital them, inherent

generate The continued facility not capital the expectations business, e-comm to actually to up the of savings, of is on for of own. that, those a our the only two-day but that no is be facility West consumer floor requires also savings. complete allow our that have first in as get significant Amazon. latter with on terms get other in will rise be by delivery labor capital Coast us And outlay the where actual significant The will more It's to our we of up Ohio are will in dollars projects the will players free and the putting like some which greater XXXX. to middle two freed are likely

Weiser, D.A. is question Bolton from Davidson. Next Linda

Thanks.

I that year, Nielsen of decline of remainder terms in or of for share So decline of expectation the of your XX% the how much is projection category by losses yield. versus guess

John. Linda. It's Hey,

will for be think inside and color, bit the talked a the most color the the XX% that. a there about negative not impact. that periods we've an it's come seen mass the the of and category category. quite to assumption think, some have and in of of I happening remainder player key have the a are in Certainly, things of in what drivers recent terms as So mass in of immune for said We've year, average we balance I

are is share how our as expected factors out, largely far As that's beyond to dependent on that play control.

are the combination bit would about we're to the at assumption that the be moment, it's year, thinking which a difficult but of for of So the two. a balance the forecast those how

behind do very think triple just you you big is the go? or kind it are from a where needs in that ratio when about X% that now where advertising ratio long-term thinking double about long-term, to has investing or long-term way, to of of just brand, then picture your the your kind from X% to more talk And what level

Yeah.

needs be. So to term we ratio long where haven't the pegged

approach. much kind very Our driven approach an is ROI of

down So some that other and we're foremost. first at test the I greatest the getting we on and see it's would activities we and thing few about we foremost, look quantitatively of if high have a second our returns. do lot is first approach, is, where our ROI what we double And of we talked tactics

we're not they We guided kind what to in will that by of do do that X% we percent. makes our legacy than XX I seeing returns. don't are believe contrast of believe ever players we So some get think terms and to sometimes but over believe more we'll sense be level, three

Walgreens just at that acquired are in Rite by stores, terms Walgreens stores branded or the are those stores? XXXX can of And those finally, gaining, stores Aid Walgreens the you're you that are additional being clarify,

we've doors for at Walgreens Walgreens banner in is been we're previously we Walgreens of pipeline last and those what picking QX year Walgreen announced So and shipped actually and we've up in additional are stores.

distribution In broadening followed first line display end for in an and Rite distribution cap year are a through that in by program to doing this Aid addition, we program, stores we're XXXX.

well Walgreens get you'll So as both Rite Aid. as

And with by Aid Rite how along does the go of acquisition that Albertsons?

that, and we kind - that have Walgreens see that acquired both go you have have standalone, certainly are kind stores some going as of that others forward. will of Rite you has in So will viable Aid Walgreens you'll to will some

from Next question Citi. Wendy is Nicholson,

traditional what marketing be be My your pick didn't talking it about spending that and digital advertising, going right this that it is is media, to I'm first it if question in but now? store, is is be to thinking incremental in about more promotion up you're the comments, going you're sorry I about to going

is Wendy, this Sure. Tarang.

and like have tactics The of first ROI that component good already some against. we is the

reaching Putting an that that results get amount and about if we've build to program. program, Beautyscape other we of that we efforts community. behind Beautyscape more the believe had we I their authentic to in communities think of can and great influencer influencer terms So continue reach

number efforts pretty say seeing also approaches. other testing of Second is investment good we're behind. is then And returns that have put more on I'd we a third, digital we would that

value on example, put video have, video, building free, as broader we that our message tactics for as kind sampling. we and of digital cruelty extraordinary well and of the kind So kind of into that testing having awareness, overall as I mentioned messaging as broader well and quality high way XXX%

learn the always and activities. of we've of we So against and kind see return and greatest brand test get allocate a there's dollars a where number test, will that - we been those

And do you that, accelerate great of the the et it their is sort you to their spend in part an feel like there's part, beauty influencers, of to feel do you that more like first on of well? waning the spending there momentum is cetera, you just behind such that actually enthusiasm opportunity feel the think support more, pressured a of

we've Beautyscape all, great our Yeah. believe, results program behind had mean, of on I We influencer. first own

confidence gives we've thing So the first that momentum some is seen us there.

kind marketplace higher The we've crowded brands driven number influencer second have is the even mega seen of reach. of is that and a

So marketing are it, call I place voice that question for against And we of looking looking noise attention your is not we're of consumers, a tactics, making of, to support. the there. people put money or one kind in to making that of, enough promotional the on then kind face previous sure, our from

We as extraordinary an is. it value have

both marketing as term. this well about as the talking of really building we're for long kind So equity short

and us way add, not same that as do our right we thing at prided pay world, show the And and and think increasingly and kind time, we lot good of seeing a and the opportunity just community ourselves a that I category, kind up brand. we that consumer influencers as an to the our back really a for tactics fact guide a of that a for authentic it Yet, think something us a participate and things an John. way I only would noisy should be in the would we're think, forward was there's on about. in want that time, I to didn't all in the we being way see that is that other hey The driven does at long Wendy, in e.l.f. it's to thinking spend come do little money really authentic afraid to other

premium a one of dollars, any launch kind you And was a the it But question lot and then or market priced finding strategy, any specific off as alternative. you confusion peg? on are than it $XX cheaper I math, pricing $XX that you get the said feedback think, in your $X products just more you the but is some

including Well, for across to price is points. I points, mean. key opening price innovate us all the

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question that shelf the beauty, care is that product in that incremental or of patient And shelf and or standard space already space what's set that at in you Ulta, the incremental is then me, is Ulta last very skin said your in test product, I appreciate is with you Ulta? my at being

skin let's said, in this testing We incremental like from the they care we'll better, their subset that e.l.f. doors, continue space. so try but So of and other space skin skincare give and we overall were there. about test and pipeline, excited is prefer having but approach our our our particularly care innovation Ulta a set. we in typically a It's broadly, within in their in places, an we're

Bill We Chappell, have Mr. from SunTrust. a question

we've big in And for to it's release, pretty the forward that be XX you comfortable started then fairly XX Just are I and asked how track, as you've your with decline months, at in on changed the two, place understand, trying decision channels, there'd track we this plan things look past in to been do trying to And decelerating straight try arrest your like to get to a change to been been what the six if consistently put data [Technical mantra too this tracked and and much the should going a calls, so months. and and need been to Difficulty] just late on guess what's I'm that months we feel both you concern much dismissive first, direction. sales investor to to have right at ago, we it's longer now, time long finally going head? sales get the we take this point, over doing

Bill. Tarang. Sure, This is

you've weeks. change to would is the ten say that the I would over seen it, even I So eight that deceleration last, we saw call dramatically more biggest

surprise kind track as of algorithm when a we a did at talked kind our about had be our where X%, plan, expectations we to what took us the relative X% an initial so actually expect kind non-track. sales between And of look to it to were, even we of versus

do we're more We I a in that be the mean we think in year item from we've spread items for probably part of as of marketing existing was wanting while will get doing a of get invest to it's getting that we've for go that's able national retailers. And good say learn I when things, long through. that and to sufficient of being and terms I that surprise. more that learnings right many that kind so the concerted in only optimization distribution items. lost brand so of talked Every taking, term. actions base. key in even And everything was some pretty we'll number but we'll key launched distribution effort, I'd of the what more as think the actual think that the some of short, these through single that products, we base then better things after that terms others we things between a effective. think a natural not right - Same launched our as evolution believe I year, we in a job, time of to across one particularly spend mix continual. this now, process, lot focus, go the our enough a seen our key with We is the sometimes a finally that building things are new products what the

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Yes.

XX a recent with basis. you my how combination both productive trends, have per what's just and key and with we what some pipeline remain Wal-Mart linear them stores, what at you. Target currency and on the brand foot that we both bring I picked of Even you So innovation up in a your are the of those, with look is of space, take the most years, them consumer working Target on the if where a sales of tell I'd like most and history of Wal-Mart productive

So is relative our category quite really overall to strong. strength

our intend there competitive years do customers that before both kind competitors as some relationship of our I role is, them in look position. The category. We from had not action you be seriously, when to I We thing as that in grow standpoint, issues a certainly very would at of sustained other are take with their tell well these helping was taken.

them, kind with going other that and the our good Wal-Mart forward with terms on And of, as we of Project of partner. really we the we can have resting things shelves, feel share Target, particularly can more new so kind Unicorn of I of to in both kind products we continue plans getting that about and what bring as do

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Murphy, We a question Piper have Jaffray. from Erinn

understand just about bit a how guess the to pathway trying I first, little from you here. see

does are pulling sales over that and talked so to assuming I from CAGR and international. ICR. little XX% that within that think years about XXXX you've had slight bit But growth, at ongoing you XX% kind the pricing then how the you US last talked a of growth, about back definitely mix being several you between

more you're curious on that talking just international today? given Just

Hey, Erinn. It's John.

position obviously, So year. give not in to XXXX the on a guidance

I of but did think everybody's and have to how a a XXXX was we next left, that there's play question likely in there on the we that XX% out this out would XX% acknowledge year. lot mind

the on would a I take there's that level acknowledging specificity low be continued before place expect remains talking of able be on yet seen to in path to we be have will we're 'XX trends investments initiatives current in growth and about to that we a that we year. and time that the any would XXXX position lot a of other be if than to with kind think talk

that in of some UK some seeds than both planted the opportunities mentioned, the US. in distribution as that here continued like that, as get international some see specific in of other the are hard Germany things terms the being we Beyond to Tarang geographies that the more well and of of

it to you're the the about of and then and be a longer like you bit you are of scale expanding bigger, so if kind can more just out UK it brand. international. maybe building for to opportunity love team, within there you a Would Germany. term the how It resourcing talk how able of hear sounds you're the So are little kind that could

Tarang. to and and to those to to journey partner into Canada able be US obviously wanted of Wal-Mart we expand next a enter, is done in few US think roll what mirrors a last I in the would international sequential priority terms strategy first we our that geographies. started a This of in talked we Mexico, We identified, say, countries great with a I lot year, we've about disciplined up. our kind the having of being

partner again, we initial was it, enter Superdrug, A.S. that so of As division such of would UK, call market, you kind we're the our that consumer with messaging in Watson not market, a but would would looked there they. of officially and kind focus beyond that see e-commerce our business only to I great

So ended market. up launching of being way very good a of kind it into the

and do that markets e.l.f. that You've is given big extraordinary value find seen have role wanting can that us place model similar put in Germany other of in, and as retail look the that we market. already, and quality at partners actually with right in a things kind our our are we

the efficient partnering model, really of is things other so relative we've many market. to which part efficient pretty And models we've for retailers pretty in key it's mainly with on matter relies of, same because particular the it in a international color that US, expansion that been the that done cosmetics

way, a So make XX time. we or each the we're retailer from Quite going see you rollout. with of right and the there. with countries we're if we right from the in sure really did We there. Target similar broadening starting what at do say about XX to then pleased and kind not you brand to and us partner the expand into market nurture think the that What with want hear US, is, us

something in doors Walgreens, the caps that's make back the say and sure June, just And then said you what's you to that the that QX I a end Q&A, have it's then dynamic the in just you the that actually about correctly. want shipped Aid, in understood I I here, from did talked clarification XXXX Rite incremental on

That's right.

and pipelines for incremental. the QX. year displays Aid were on Rite ship be in then we Walgreens Walgreens replenishment was This will So

number is then did just innovations the what the quarter of last you say didn't the housekeeping, I And question so. hear it if in was. launched

were, We constant they what last did they're year. say where were we to not about but

around this mass first XX including this I to think launches think including year, I in in QX, they're launches. about quarter, X

us. So, the continues piece innovation for of

the launches. effort speed for focus expand is of we have have and biggest these do Often will always that just channels for in us the will see always and emphasis, is our direct be all distribution. main the we and data greater we you a what known change I once much launches, concerted getting number we way. our the believe we putting think I is

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Fargo The next question Wells Herzog, is Securities. from Bonnie

Joe Lackey Bonnie. actually for It's on

the I I on pretty what's guess really singles didn't mean high causing the the to month. to going deceleration I wanted down be that's flat just from, half XX%. So dramatic down in guess, second I catch in I and clarify, last in the to QX Nielsen

wanted again in half? get do easier idea I get what's because that an to think I So second try comparisons driving the and

It's John.

for deceleration of correct the an you're have negative course that what of added year the the months. XX seen of average So implying couple sustained be the of from would obviously last over balance we an

and to we go trend out contemplates revision deceleration wanting lie standpoint we that with I where seen a that put something and make have our felt from that guidance, that think sure to prudent. continuation potential obviously of acknowledging do

leveled but be that thought approach. are, that see off prudent here today, to there extent upside the I that was they some about it obviously, could that otherwise, to to things certainly we're the take where numbers So talking we

kind mass my been question, number of owned like touched including value a new you the your cosmetics, guess, other I brands. in there's at of entrants I retailer And remarks, but end on from prepared of this feel

value you are ensure products your and maintain to an proposition you how attractive differentiate So working versus brands? these newer

Tarang. say, in value. category, brands terms high had proposition would of in always quality. obviously brands our value quality core I of our This and had good is we've extraordinary come go is the We've

to unique way compelling together those way, really a in a is two put us. Our things in what ability differentiates

including price this earlier, one is said of evaluate continue new a always the that that price overall sure noticed is product you'll in in lower any overall terms bit what for absolute is there. anything, have part same look point and unit so quite that kind of kind go the year great value prepared have what talked value quality and to have see the price changed. us I we that I'll of back we've retail not up, they to given the spent things value points at us coming of the value So and our highest we the and and how that to doesn't proposition ability really the base entrant category ratings last at critical make get average innovating our value remarks we're the our is taking with of sure stack last one sites time is a we and is through core again making do time, how we're year, consumer The focus increased extraordinary every across comfortable of and If up ratings of size of we've them will points, those is a large the has which we and in thing, feel and things creation. quite just we

question is Blair. next William Jon from Andersen, The

a Most been answered, and but questions but of my just have asked, - couple.

or model now? sourcing important party is the China. in list include effort capabilities of Can of that right give sourcing You've there talked you broadening us recently that to about update respect with quickly your how to outside kind an and how

is Tarang. This

So last the part we global importantly believe based manufacturing. most in of supply important think, first US we business, taking I approach it's a our but had overall portion quarter of It's chain of very China, of that more manufactured still our advantage. our kind small and we kind talked, our our do as of businesses

of is this combination quality best and cost, So speed.

of forward, kind a whether look, As sources tariff a US, combination pricing, having be not of the suppliers existing everything's as negotiation table. taking we have we at potentially including well going look some in with of a take our the other supply, on environment it or as

shareholder where to you've little it of I reference can the a leveraging talk then by press and you and kind today are kind And to built for the something years continue of expansion that's create the to multiple you capabilities that referring bit to you e.l.f., portfolio and in over and in the a that you if sit to value the about you there's where your trying to think, release, brands - consider and at? the to understand platform are just include ability look that relative

and capability changed John. areas. Obviously, lot investments all. of it's number there platform thesis Hey, has a The a in in up this at not have different we've made of

to start quite into taking synergistic be and benefit in out I marketplace, And shareholder the all those new as those look that tapping to could opportunity different way, table the to it's stand marketplace, value the at in from are those so we the on additional active capabilities creative think and vectors happen. strategic whether And a value. capabilities, think in to leverage brands acquisitions of an options we to make there still or about some of terms continue of opportunities look to that out

Last one for me.

more structurally spending XXXX, second how the kind spending generation 'XX and just of contemplate the you half higher As then to of right what's get demand other the and evolving? you build in will, test way a brand, you investments about ratio sense that for may to advertising you to see if a of ad step in period up just trying learn this a more behind think is

Yeah.

about and to further think a generally is in half back those XXXX. we're So up it, speaking, the way which the think different look right testing I we activities even year to the that's of scale in of number

our expectation I just that of think those of nature behind see the to potentially would way event. some plan the get such tests are it's we something be if greater a sooner, the and of timing XXXX affords us but things

of where Obviously, a don't kind terms it. that any we we commentary accompanied corresponding to And unless competitors our see back focus. scaling up Tarang's ROI have would we wouldn't have those In intention go came we some there before I too, of to of around benefit being spend go thought to and legacy there. long way was a we ever of that close pursue

on the single quite think many not I that, brand. comfortable was we're more or we're how would percentage. is but dollars behind this forced, I in digits say dollars I I about put with to So position excited prospect and absolutely what to give feel guidance specific a If could appropriate

a about you're you squeeze in one I you growth to comment but say limited be apply earnings? sitting me comment more XXXX, what can know low in. today does Let and sales growth that low it to year year, you did expect that here

the if that more you relative earlier on out currently growth opportunities I to a it to year The low brand. and Jon the to table. Again, intended would I mention 'XX, said we think in manifest on business that of give would into of in continue the that suffice it be expected, for see some to we're places of in that we were for leverage to growth kind a is in that well, a that should terms be were low operating position the itself, if really looking forward rates clarity thing that reinvesting those a XXXX, not year only reflection the played be trends things say

JPMorgan. The Andrea next question is from Teixeira,

It's Andrea. for on Christina Brathwaite

the that Tarang of falling of back made what's of kind I have growth you of kind than First, products trends. the from faster there older any into driving that to made on kind deceleration want just research historically, a historical comment about circle off sales

of I on new always of we products The that natural say, are fall it there. balance year call sometimes time. see And and and consumers of we've is, so There's carry particular, innovation piece in for specific shelves analysis. over bit constantly off value new kind what varies So on a done there's by looking putting a and carry every a bit talking would this do was retailer little our there's forwards mix on forward of healthy retailer. about our this I we a a that

one retailer, at or You impact another competitive brushes business versus place on face can a brush at your initiative have, could products. a particular that

of think go so just about can kind for of of That for total is was a say, the talked That's great sponge, I distribution item that's had products value many have we And we And have the as that where product, much it us. category how I great mix We one a spring. last example, to distribution not kind and magnetic of size, pipeline of the in we for us. in out. I earlier didn't us, at now kind really terrific a, great larger our in Again, broadening this kind back old versus the had which available pick so know, have going about that was things would there. that I new We example, versus really year, for to an new proposition. broad look if $X do the, face now I from. it's till we mask we of only just have that is year if being just a we we're phenomenal

us we of seeing and think number carry that primer new glosses. what lip a that forwards versus Our to on able oil hurt plumping not kind the relative missed, are were frankly shelf we're to that there. control There get of we and our items

and given thinking to are you how you tariff and kind commentary. pass about just you pressure higher thinking on continuing share original of there, year, are you've aggressive. that in the of of the on tariff, private pricing one your to to picking to which was the And kind you could you how over that at seeing lowest volume last - and environment have I then this possibility least is pass the with to made the attributed composition being more provider ticket, comment or preserve ability brand cost do you and pricing, margin How of call just think during label but you're being move much have partially back the the to about where think seen then versus you your was your this

John. It's

see important it, So of But levers to of I we it's us. to or I get given of we do. to some the not don't then as competitive where may and too uncertainty these may pricing think several one is far want available to into sensitivity that note that stand just conversations what

as we be country you over that suppliers well. As play of share That in years a strategy. the of and broader terms of here rate, so the certainly and with pricing would calculus price that take sitting believe and actually that partnerships some that were selectively mass a who we items, said, mitigant the burden folks would expect in also different to there long serve number that could think would exchange on to having opportunity many some in obviously as sourcing of also would a in alongside help our the mentioned, be about obviously, the have that landscape have particular, inform the into of us we things

that be it leave at which So a would that of just be would I things one. combination would it of pricing

and XQ reconcile that how think saw I'm out should then SG&A trying in item the brand behind me, need between commentary line trying for be terms in difference in was the invest during year. one was to that last discrete of there pulled the you the that guess growing dollar something I like more specific, in the the to growth then we quarter, just SG&A, And to about just of to rest the contraction

was out. No, nothing we that specific would there call

think back anything spend way, that get the of behind. if tests flexibility greater giving some to in I the as up SG&A take of the to as half get else. take us a Certainly, levels I you reason will more we of you look a really than and about for at it some is wanted them year, was mentioned timing in see earlier, behind brand earlier whatever really

to the for you it be to closer quarter? XX% the year? this rate tax say Did the rest Sorry. guide Should of

be consistent still about guided quarter, to last what would It with which we XX%. is

Next question is from Morgan Dara Stanley. Mohsenian,

I So question declining versus momentum those on customers revenue my saw follow-up pretty concern guess shift Tarang, a allocation trends that's want forward. historically. pronounced fairly space your would the to shelf larger just be, you mass your going your are significantly the now to on at customers strong I and

risk some like pricing. also you're key that's understand I a but into expanding So it retailers retailers like you're in you still look may seems beyond factor, productive, for mass it and other XXXX those sounds

So would some I earlier. typical space sound would as all concerned you those potential at customers pretty shelf the and risk, create larger discussions think didn't things

guidance can front? little mass your gave, drives a revenue detail on shelf XXXX. So confidence at just in give XXXX in assuming also you sort the around are more me that retailers in of you And what those you what space

Okay.

will one first John the give I take second. So and the

like business key our both you would with and with so we the Wal-Mart, we have all time, customers, them trends, talking we're kind our partners pipeline of of we're go business, kind what So our in approach forward. the in planning and terms we're coming where to talking Target with the

that, productivity overall our to is back are important even go I'll strong, extremely stronger. going more plans than So, even our forward

what partnership our conversations take in pipeline, we're like where of this. if really category you you first well track of grow run we record years tell the overall shelves, of have our how their we have want I of into items kind and it what of is going ten would new year what is continued terms terms in we this at those a do in on is, ones which we do a are look kind and is the help year we Target So learning kind had, on, I'd

what foot very of foot still players. to to And compare a going conversations vast will the that majority we Wal-Mart with I terms perspective, Same is majority is Wal-Mart legacy of the we're four for and the them set. still run will on at the to in of in do. some with close have XX so - the frank great in chain

grow are partner That come both of as are well do a far as we much of the to to of so as what terms as going of kind our on hasn't productivity We share of fair conversation picture to their be. kind spaced above allocation category. what would to into in under help continue kind kind

say So, never. you never

hey and I second in forward terms part expanded think way, feel that Target have with we've Wal-Mart then your had distribution. position. which and I some very plans but our of our competitors gone on untroubled is, going the you both And question, confident of

I been how very expanded we've careful think we've distribution. of

there's If I'd you Ulta. strong a But you Target of we of our brand we as think kind into sure Walmart, that Wal-Mart, is talking of we only Wal-Mart bigger continue don't as with getting after way we at have to that now had making partner a got thing towards. to drag all along old a care can plan have lightly. of XX-year making is kind our And We're approach we continue and that been strategy first really sure has from before to kind with. and same role where in take map into in foremost take lot business already we to goes tell you that made we each a expand that and sure really we Wal-Mart target went into about and

some talk the echo On of perspective early that question, earlier it's XXXX to specifics. my just I'd too far

some your tariff on like these if a out delays of in you any a sort US are indirect the and have other tariff there regulatory your of you tariffs? And of may in plans into China backup that guidance China the sourcing, be in result the and on do then assuming of place XX% is of side, imports things an terms

is no back tariff assumption half in there XXXX. the So of of a

any of again comment some I be take timing would plans would the of things when the difficult on that question the table, are on to think hold. those even but some of

position that the no say through through. and mitigating from beyond The lot that a supply on some it there global point, terms levers inventory looking second supply I'd of to was talked comes thing any then and of issues is in just our our other kind basis, your flows of we from how there a if And benefit earlier. of

the but to So we're we see kind comfortable land. right now, tariffs where of really finally have

question Stifel. Mark The Astrachan, is from next

on This is Claire Chamberlin for Astrachan. Mark

Just in wanted to ask a question about productivity Ulta.

compare talk Ulta productivity can how versus mass brands in you you've that some in in retailers, about the that. So large your the you other of very but mentioned high

is Tarang. This Sure.

So their pleased their of not is to so we're the skincare they Ulta numbers, testament rollout. has stores. to been e.l.f. doesn't that particular testing relative. and want chain productivity a as of both I specific And to us What give with in full a think, the I going you you tell can subset very of I'm kind did great give a

consumer So as excited we're by we overlap kind Ulta good seeing again well. what quite goes it we're at of, is to and back believe there a

question Wissink, The Jefferies. Steph final from is

I initiatives wouldn't maybe versus curious the your just both so comments a look distribution the we follow gave, we'll into If being little Target, about guidance. data you but track your half question, there. those how the that so another into higher throw think Rite compliant specifically Aid, with data talk think data, versus guidance factored the at to to and get not about imply just rollout second should track actually trying on that XX%. out so are at we untracked those track wanted data up be holiday should We're better one one I worse, retailers, bit tracked on down affecting track

It's John.

company that influence sales way track past bit company from that I'd draw a and fell things all in data number reflected tracked the little piece, through the to always difficult we've in things correlation say. few So sales through are up but heavy actually a the aren't and that to of there spoken the and

obviously, XX% number for that the of First, balance is the average year. an

in that mind some of I back I things the as would in my think keep you really attention commentary a between your and come and couple to of things sales of delta quarter. XXXX to headline kind that about to think like third Obviously, pretty the there were draw dislocation of of transpiring rate were 'XX. would a QX that few that the quarter quite on that significant growth look in would third company create what

get I so normalize sort you track would And that a for back to how compare of of better have out to sales. think you sort to sense could sales the company

QX, track benefit And as the The Ulta doesn't which in other some piece captured non-tracked generally. was the of that I mentioned channels of more muted in Obviously, quarter pipeline. get a the result. fourth is on shipment year-over-year,

One Parikh, Rupesh last from question Oppenheimer.

the larger our you weight any know Walmart performance. your in retailers going think have So are competitive product the seen out on be look New checks Northern promote you we as deceleration your your we've at at Jersey, will I next in least to further from of some the starting seen that channel, to in you changes stores?

going have Sure. year, their impacts different I have mean kind to I you're at stores. retailer, of each of to and going every you're think every

in we'll come CVS. with came target early a both as seen now, ago a don't to as take I interaction look. and so NYX we've have days, we particular, few in NYX into We Ulta years much still it's think

as I NYX point So to an interaction. wouldn't

from enthusiast to different In have their of and both again e.l.f. map in of and lot and they're we but more a both to recommend some of a core we probably out consumers, attention well negative core influencer competing that with appeal of competitor. as just would of and driven say times, yet we they kind of think on departments kind real are brands that the both macro players NYX for kind we are so anchor kind it by fact, consumer impact retailers customer space standpoint, as these less some but that kind a see of the I set will a competitor legacy other of consumers' so as on there. by

half terms was of of then hoping in I John, you some one year. back about the can guidance one. for quick margins the you're provide gross in last thinking And outlook the how

Sure.

line were we where would they to expectations be coming into gross in expect this would our margins with XXXX. I with year, consistent in So say

way see I year in balance were you'll made in third a plays and they the think last that that the out, QX. come below them the then up probably be where for quarter little would

This turn comments. floor question-and-answer like for the to over back concludes to session. management the I'd closing

for joining us. again thanks Well,

is improving brand our Unicorn of believe actions key e.l.f. more brand challenges, and a young Project both the our facing term. integrating short efforts in currently of plenty whitespace and are we're for long it. with in through have We we investing ahead the retail assortment important products While

model and quality enthusiasts is at an diverse products and business love offer extraordinary remains brand value. we a young strong. e.l.f. brand beauty our Additionally, high beauty

we Finally, to forward We seeing you Wells have platform you very team. great September. conference at Thank a the much. look Fargo and in