e.l.f. Beauty (ELF) 6 Nov 192020 Q2 Earnings call transcript

Greetings, and welcome to the e.l.f. Beauty, Inc.

Second Quarter Fiscal 2020 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded.

pleasure Relations your and my VP Willa now Investor of Corporate is to host, introduce McManmon, It Communications. Thank you.

You may begin.

Thank Second Earnings Corporate Communications Good discuss Vice President Willa everyone. you e.l.f. Relations us I'm joining afternoon, and Investor today McManmon, e.l.f. and Beauty's My Quarter Results. XXXX at of Fiscal name is for to

companies in-house. be For like I'm and In September, Ellipsis. the IR outside firm, IR Jasper Cisco year, past and of mission. thrilled up joined Trimble I e.l.f. I've e.l.f. for e.l.f.'s Communications and heading was and team at a part of years, the been I XX part to

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

for differences refer the information In non-GAAP reconciliation We a today press comparable GAAP you directly a most between the release addition, to includes presented of the basis. non-GAAP today's and the presentation company's on presentations measures.

Officer; With me Officer. from Fields, Mandy and Executive Vice Chairman are Senior and Tarang Chief management Financial today and President Chief Amin,

Tarang. call to the turn I'll over that, With

net joining $XX afternoon, our today. and with you, sales and Thank We're to great for with $XX EBITDA you of million quarter team. Willa. It's us of results million. adjusted second everyone, the have thank you on Good pleased

the to year ago. ended cosmetics versus category of X.X%, versus up were dollar XX share. taking sales XXXX, up ago. was XX weeks October net stores, the in points market XX% share We're our basis year color Nielsen, also X, e.l.f. Excluding According

outline Mandy Given we fiscal year which guidance, our momentum, shortly. this raising will are, again,

strategic X line XXXX, improvements. entered market laser-focused share We imperatives on and top to year fiscal drive

on Let a update provide me brief these. each of

our drive to Our first in imperative is demand brand. strategic

We for and the sure and to accessible our beauty proposition. value compelling make lip job it's eye, make have our mission to unique face, a we're of best communicating every

behind delivered basket versions with ads based campaign, pleased are on the XXX a peak and #elfingamazing affinities. shopping e.l.f. we with celebrate the vegan. e.l.f. our different underscores extraordinary to consumer which that premium to of and control, shows initial quality our filling up e.l.f. are cruelty-free results respect, consumer their playable products Examples value; include: which and which her We fact interest

we commissioned XX%, of A study ads far the YouTube chose the success, sales and we XX% ad in e-commerce we brandless XX% to to that had video marketing of net both found quarter, recall spend and spend take land for for range XX% XX% Based to on around up our rates to our initial benchmarks. plus that above expect digital around XXXX. fiscal completion

consumers. digitally brand, a Our major always focused our and engagement authentic mass in imperative on e.l.f. we've native first is was the second strategic beauty with digital. step-up

sponsored e.l.f. expand staggering million incredible. been trending response hold the any challenge, has XX-second number in song millions generating among presence paid #X videos own ad a brand and for users challenge new most a a campaign hashtag to Face., we award-winning of launch, created, test video hashtag platform to of from upon we digital following Lips. X.X our have music which and song. #eyeslipface songwriter. original Z. The a views Last record first TikTok of resulted branded encouraged their X.X continue Over to billion hundreds original month, We TikTok, on feature video The views. Grammy to firsts, and been Gen an challenge including commissioned first the to a huge with TikTok, record Eyes. people The the platforms. on challenge an

digital Our e.l.f. digital followers has increased major step-up million resulted Instagram. presence recently in in on across reached platforms. X We

now most sites continue Loyalty over importantly, X.X Program Our growth. our Beauty retailer.com and and members, million elfcosmetics.com strong has to Squad show

Our imperative at know make quality is We e.l.f. an people how extraordinary third value. strategic prestige to providing first-to-mass products at want products speed.

Our and concealer products perform primer and Concealer supporting adding Putty gains Poreless leadership Grail to our the Camo newest Holy market in category Primer category. like well, to the XXHR share continue in

care. we've for X, XX-piece skin In up pallettes our care XXXX, strong performance $X weeks strong XX%. skin Wow to also success seen and eyeshadow seeing also resets, XX total Nielsen, sponge. e.l.f. the sell-through behind We're the Brow, our October According in was fall face ended

a of built success to brushes. foundation mass seen products sales still are the recent innovations number primers, and e.l.f. e.l.f. multiyear one for make have that on Our eyebrow and brand pencils driving

resulted allure.com, e.l.f. zoroport.com, XXX as well another as collaborations impressions and media collection to from or XX million Nabela refineryXX.com with reach the power of our brand. X.X product whose no size influencer Bangladeshi-American launch continue we product inclusivity also embrace million age, to These platform your amplify beauty color. show month, through We Last the her skin with million a expand Noor, of in The through results reached leading and over key the new collaborations outlets, influencers. followers matter a self-love beauty including introduced influencers.

to multiyear improve Our multiphase, strategic and national is package retailer imperative productivity through Project our self-initiative. fourth Unicorn,

third growing most our that first second Unicorn, which of brand productive Ulta We our basis our meaningful phases of resulted Beauty, alongside customer. Walmart As largest Target, pleased also remain productivity. at We're largest productivity in step-up dollar-per-foot in customers. complete. Unicorn, our X the most quarter, marketing activation, has SKUs, of at both X and are retail We're on a a the include the

during to Phase bring to merchandising key is spring X visual to out resets innovations. is of and roll Unicorn better expected our designed

our e.l.f. experience growth sites capabilities on to and addition personalization. such we're the learning double-digit productivity also saw machine elfcosmetics.com retail national and channels as in In retailers.com our other with our consumer where across with we partners, gains enhancing

also business, growth in in U.K., We our the Boots saw especially and by driven international Superdrug.

to cost fuel strategic savings imperative investments. brand Our is help generate to fifth

initiative savings in the stores employee difficult below cost we that e.l.f. was exited and XX expected was to plan our decision in for thing but and to in initiatives at and the the operational for half our making used spend driving happy year. automation, do leases to what important most transition. our in as that Redeploying values good XX a momentum retailer we closing employees. onset be well progress businesses. with e.l.f.-branded million February. report of we California base, to move We're it This impacted greater right Our boldly our I'm this successfully fiscal new stores the hope this $XX.X also national Southern invest our annual in elfcosmetics.com on our by we is store of end

for lower average our of quarter. unit Pricing changes executing basis help Another all significant of quarter that approximately mitigate approximately and modeled. innovation retails. increased have we to tariffs. the increases declines was we've primarily I'm SKUs. important mix in history productivity happy our points X/X to as almost unit partners to that retail delivered XXX drive net growth what the and the Recall, are prices we than This implemented our the cost was price second XX% sales most initial XX-year report used initiative price national in on action pricing

impact the monitor long-term We as we will move forward. closely

What team. is X greatest is the strategic and future our dedication on progress in imperatives the The me our our encouraging. gives quality confidence of

Over the past X approximately of years, our XXX hired we've XXX employees.

listed XX% speed. at companies board. more comes this consumer XX% XX% I U.S. and e.l.f. team's proud have I'm e.l.f. confidence blue-chip, on I'm proud reflecting to moving to brand. the diverse, that they love also and exchanges, backgrounds, women beauty that X millennial grow of consumers all Our of the employee companies and base we is XX% the and XX ability continue than on from that our the recharge team with serve. is in female,

an time executing value. long-term imperatives. e.l.f. are with It's we our progress believe We're These that at build Beauty. will initiatives strategic shareholder exciting pleased the

turn results With the that, over our financial discuss to I'll Mandy and to guidance. call

with second impact results the pleased the strategic initial also quarter our imperatives. I'm Tarang. and you, Thank of

XXXX, Let me September X XX, ended highlights the as September to the financial quarter XX, ended XXXX. compared months cover the of

sales from we discussed that net driven and across year XX% channels initial from by productivity holiday ago of quarter. price were million increases, impact partially stores, shipments e.l.f. lower Excluding up last offset the increased $XX.X the by

the up half, sales first X%, a up For on X% were net excluding basis. stores, X-year and e.l.f. stack

last margin the because onetime accretive basis was year July, full our price we XX% Note that QX gross innovation, benefit XX% level. margin partially versus higher Gross in primarily was prior of pricing foreign of favorable points year. without offset run The tariffs. vendor was by driven increases at compared concessions late with rates, of and forecasted tariffs higher the have along improvement rate the exchange by taken impact than margin up to XXX

We expect XX% the year. tariffs of of at this level in the impact back full the half

also remain should we our relatively into a flat. value reminder, As inventory as bring warehouse, the unit tariff our increase though inventory goods will

X% from to spend stores. was basis, increased This e.l.f. by adjusted in of expense in a quarter. driven initiatives net up year, of an percentage was QX, is e-commerce programs. ago the year partially our XX% On marketing savings from closure and to and SG&A compared digital cost related offset as XX%, customer last primarily XX sales In by depreciation our the marketing sales of investment fixture XX% increased

on last On take we year, based see the we the discussed XX% XX% call, upon right for and the while spend spend line. up plus reserving e-commerce between to what top the marketing

we expect XX% XXXX. for Given spend to at XX% the marketing see results, line top fiscal to

down in improvement a million Adjusted generated net $X.X $XX liabilities cash termination September a XX, last $X.X balance compared per The was cash million million Adjusted related million diluted share operating leases. share results, $XX.X of to or was our $X.X the offset other a payments per bringing balance was $X.XX stronger quarter, diluted million $XX.X to XXXX, ago. year $X.XX driven decrease compared a or versus year. EBITDA X% to partially of in flow to year operations as by $XX.X from store million by We primarily cash on of of income ago. million

the share to the total second In amount bringing $X.X million repurchase our quarter, stock approximately to million program, repurchased $XX against of $X.X million. repurchased we date

extensions. strategic as as on Our imperatives remain our strategic investment X focused well priorities

turning fiscal to our XXXX Now guidance.

up the range net sales impact of flat X% negative excluding This previously e.l.f. X% is up the X% fiscal versus stores. to be expect to XXXX, We to guided. from

between share with EPS count net $X.XX $XX and of EBITDA million share a million, of adjusted expect adjusted We $XX fully million diluted basis adjusted to million and a million. on and $XX $XX income per XX.X $X.XX between

in seeing to our top our XX% raise this the in rate come reflects We momentum expect tax guidance at The for in continue we're sales. quarter line to the year.

that balancing are of as the We backdrop cosmetics of the soft category on a color well longer-term pricing as monitoring a momentum with impact basis.

impact reminder, quarter see a a program in cycling a in As the to year. expect from million on QX sales and net $X third pipeline larger we holiday last

the the the anniversary we Camo and tough activity Additionally, quarter face organic Poreless a effect those comp launches. drove we in Putty in quarter. fourth The halo influencer Primer will a around sales launches year as ago in Concealer that resulted strong XXHR

an EBITDA expectation to maintaining our margin perspective, From year. we adjusted the for margin are XX% XX%

the since As level, to expected higher without the offset stated XX% the benefit had the pricing consistent we beginning the XX% earlier, I range XX% margins. the Overall, at is of in what of onetime QX, drove with we've year. which tariff

on I by our business turn quarters. the the strategic and are questions, last that positive we're few over We want we imperatives. Before I seeing taken line reiterate executing encouraged the the trends top has over focused call to the against remain direction to

operator, that, open may to questions. the call With you

Instructions]. [Operator

Our first of question Jefferies. comes from with Steph Wissink the line

We one and Tarang, we is have question, could. for if clarification, a The you. question then

at as totality trends the the then, experience or of percentage you Why speaking, percentage just at on gross coming effect have innovation, better happening of to do seeing? what business China? an should from some a Mandy, for you space, with What increase? Can margin the side? we look about in the us working in you been able whether broadly advantageousness retail? and advantage, providing think you're about us is feel price that like cosmetics give concession it's terms How color Just And would a can what's your have of providing just a step we're product you how where book think you're some sense for clarification tariff vendors consumer XX% in impact. you, back And of year you impact? remind the you the through should we on tariffs think then the your of

it of advantage, reestablishing our making and comes our strategic eye, Steph, do every proposition to accessible well, so. X providing of face. it heart through think best consumer these and lip overall ability core do I of and the the of to mission beauty imperatives really our terms And that to in

how that's bucking category. we're think the in I trends the

the category in ending on XX down about track basis. a X think I was periods October the X%

up is X direct of the strategic in we a back XX just consumers. that kind which basis of reviewed, on of that pick go to share the category ability offer imperatives Our proposition to reflection I kind really core fundamental points

at is Steph, about XX% on the subject the then, And The the is level. to XX% of so business at XX% subject tariff XX% tariffs, remaining our the level.

be there's were of XX will and And that always and the again, the then no terms with that this savings, impacted lashes there impacts on X our finding there year. And vendor our Now things with that's smaller were tools here. that by are how December and September we're coming, tariff and they in team working business. brushes China different in tasked concessions, some for

generating is impact. that savings offset team our so some actively help of And to tariff

would The it a last say, is balanced approach. I thing

savings the So best Recall, we've -- We execution to we did approach pleased has our consumer X/X and particularly the on up XXX are in SKUs the had that from XX% value, benefiting about really strong. I not where pricing pricing. been the actually peanut of about cost have we a quite response basis both We we and price. FX, we butter mean Mandy generated consumer was growth. initiative talked, with took do we our points approach. on we're targeted of thought sales our

in So early we're days. really pricing, at pleased with these least

Chen line with question Oliver and Company. Our comes next of from the Cowen

results. solid on Congrats

at context had your trends Regarding you're nice market that in and learning in momentum factors competitors and some the color terms also, and and seeing and monitoring pay thoughts you're the softer as a should you're what environment thoughts to. of are And doing Tarang, What forward on love X might pricing, the pricing? also you've stores that Phase what promotional manifest, X around going how there. attention well are from with the your of department the of as cosmetics we others, would Unicorn Phase

we doing touching has last and say gone products, my Oliver, we our expected, on on did I a focus which on would pricing, consumer-centric to on we brow really really building the to better than statement comments, like extremely including make value the making are because mainly some items not approach $X execution pricing where right wanted equations taking a pricing, well.

brands given think terms we market pricing. I cautiously different at are In going just taking looking overall, forward, the how many will of be

period, we've others taking this those shelf, we start past reflected not. seen we've segment. As announced to pricing In number And very the our heard of the be leader of they're on segment, a competitors of value much pricing. in since led some

to happens consumer look other prices So as what to a we'll take at up. behavior go want

of key has certainly us kind a national terms our better the helped in we've retailers where pickup of our weather productivity Phase initiatives, focused really at merchandising In X is innovations. on productivity. on pricing other helped Unicorn and seen visual our

the be they're SKUs job, really majority really products make Phase and X great further the And these is we Grail, we can much As there's going that complete, done what that consumer. to X, highlighting believe and sure a have opportunity Holy really to about. uniquely now we're offer of that's I are first-to-mass X while think Phase a which of our we

up And tailwinds? headwinds done your on of job as the how What follow-up, gifting this you've on in bit holiday, and good period the a focused Okay. about key a consumer the And and just are year? what trends and a you're shaping last little is mixed be might catalyst different year executing thoughts versus really on past. holiday a the holiday there's this

Sure.

a holiday job Target, nice So us, I'd really always our holiday customer say, their program important for on always especially who's which done an longest-standing is program. is with

As Mandy planned. have we year, mentioned, holiday a smaller this do program

we I a really, I'm be by level our going of across looked various probably bit and especially presentation think excited customers, to our But smaller this as is offering. year. holiday overall

right In our fact, see if our you holiday as go on you'll gift now, core elfcosmetics.com assortment. as guide well of a kind

I best think holiday. on we've assortment it's had we've the best the had and program

important will play program elevating terms overall to size to while of an us. it in continues the greater So and the smaller, brand bringing role awareness be

line from next of Teixeira Andrea with the comes Our question JPMorgan.

the if is and the the have have and new or with next also Tarang high say July, saves the than into you working to -- Mandy the and doors hoping cost clarify your you're to few embeds velocity. -- also took inventory? more because to fair or a going expansion the of your to just -- with mitigating it quarters I in guidance tariff displays it on of margin as pricing that if all is said, equal, facts you're before was timing probably things the obviously, impact fair And favor, in that tariffs your of you full So more because impact, and mitigating until

I'll those questions, take Yes, Andrea. Okay.

new seeing in clarify, I that the first balanced to the of of no, out coming the that items with just guidance, remarks. So out really any business momentum on doors. prepared half called it reflects in the year, the new other not does the It include my we're

tariffs the side. On

pricing. I mitigating characterize say impact, in a I is saw benefit we but from tariff the onetime are that we QX, So it will would how

will see to point, and starts to to margins start we erode. roll, inventory that As your

of benefit We tariff expect do a we that back would to start not I I enter see this half expect the level as margin back to year. that to see in half. the so And say XX%

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

Eric Erinn today it's Team, Murphy. for on Johnson

could curious you're First, you where Squad. the if update Beauty was I at on

you know I elements were added over think personalization I other and million and members you've some X quarter, last improvements.

guys there I'm or have over learned XX So curious what just you last days the so.

about We're members. over up Program. Beauty our million now Squad Sure. Loyalty X.X We're excited

continue last scanning. and including functionality talked benefit our to we that features As receipt we program, call, to on add

across product Some placements of and of on e-mail Program, key of our personalization the include Beauty in customized recommendations, -- Squad messaging mentioned, I overall and machine dynamic learning various that's and some Beauty brand key scanning. and on platforms, as optimize initiatives Squad kind including It's benefiting text Program. then is the benefiting the Loyalty Loyalty receipt media and the as also our

Beauty growth to to So overall elfcosmetics.com, than stronger retailer we is on national be and Squad remain seeing brand drive business. help even the propel bullish able which our

That's What any marketing mix, incremental that on point Great. And guidance you been to, to encouraging us upsized you'd on that then raise. the channels for here the Is return helpful. spend? places X, to it's X best or the seeing specifically X parameters that are monitor? really and see there

Sure.

our channels. strength seeing news we're across great all the So overall is marketing activation with

growth seen and our across have national we So retailer business, elfcosmetics.com, retailer.coms.

the digital across faster. given but each are includes digitally there's so the them. spend retailer.coms, even we oriented, is growth elfcosmetics.com That feel Certainly, great our channels, great our growth of And much of broad channels. all as growing given the how well about both scale as growth across is

Bill from Robinson comes next the SunTrust with Chappell question of Our line Humphrey.

was the well. how assume went understand Can and the the the then products impact same September with as of and pricing pricing X, kind thought both that and hit the of were -- trying you through to of impact in of guess, around I much tariffs or I that you time that tariffs just started quarter probably to

X/X that the You So about pricing impact and at way this of quarter? is look the right probably to it? on full both get impact and tariffs the had you'll

Yes.

that that's year. that, a have We'll I we So in impacted XX% the that way half at level level back We see the the think Bill, think creep XX% we're tariffs into talk the when really still QX, the right didn't about QX. to lot looking at. the about that of of is

you as at we XX% expect tariffs the go So full half impact of the should second level. the into

On quarter's in our there's July, so a the nearly side, the of pricing implemented included worth so full numbers QX. pricing for pricing in late

was incremental to you and/or launches? of Perfect. the you can key both products you shelf then, the product we getting the kind of past, retailers into Okay. that new at the expect that color right time. forward resets space Tarang, give retailers the And wanted part next I any as know at all look issue year, in us on the

works how kind so the spring that just for resets. And understanding of

Sure.

usually implemented. So we comment on after our incremental started space, it be don't until to

did particularly the I almost have, towers the then, up flex up and It we've year, only with our this of at we did pick as expansion Boots. pick of and this we pleased Unicorn, showcase part disclosed merchandising Target. better previously for distribution leadership that year. doors. I'm segments. are looks a And much space think, like of Unicorn. for part space assumptions space So really subset as They a additional we Ulta at have that Walgreens We

build And continue continue and so enter momentum to retailers. the spring we'll next our that as key year with resets we partner on to

versus just about letting of our talk next what competitors now, fiscal when and with will don't they're e.l.f. we of kind space, know customers that year has lot we're really, doing So their do with a about talking like to

items, our of has one terms clearly drivers that In success. been of big new of the

Primer, items those fuel as mentioned, as interest as uniquely Putty Concealer they types the if consumer I Camo XXHR accessible just can Poreless of bring I to market think of new So it's price at do points. some the our items well we really

right even of new and we which better items that we retail our as now. do kind part up of a a and can us be and number of because that helped space Unicorn it terms we customers X, is have those enabler efficiency And so Phase confidence of into what them great have they'll the present accepting. in items that get already with than we resets, by highlight talked pick spring

and have number pipeline So good our feel about I items of new that coming. the we

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

in Phase I the you look the comment satisfied accessories that, to could of like X brushes examining IRI some was the that. increase the of were adjustments, further the bigger in has data, you overall effectiveness brushes. do to And Are the area, Or with any to just related so perhaps, tools, believe, volume of curious which, Unicorn, are the and some and on of your does things of Project declines if also, I pricing it be now? strategy? making going like with that can the things pricing quite are you way you

Linda, our since, that we migrating complete, of And I have say, say as sponges. include where brushes facing is part big initiative headwinds consumer to, of I'd an single as which brush did X insight is the of that would Unicorn a which all were well kits so was now brushes. greater Phase is

do the X face sponge to in as brushes our share quite our fit allowed well Phase we this which of value where day total is is every Unicorn in us be brush of what actually few picking so more incredible bit extraordinary category, as growing. of to a happens up quite have a fast at which kits sponge, And can

And accessories, X. saw when you tools, some our Phase we're a of and look look we with back those look So at what brushes, and from at in, at we mix take step at as sponges. we other pleased look overall I we tools,

Linda. question pricing on the And there, then

the we So balanced on impacted you is and to were brushes, by thus the what longer-term earlier were of we impact we're sure point, each AUR can that is the pricing. pleased Tarang's But on by to item far. impacted how to as taking so probably we through see this is my pricing. to they as kind that data, pricing, comments But higher, approach why make see understand see with wanting

comes Oppenheimer of question Our the from Rupesh Co. line Parikh next & with

for to start, a So housekeeping Mandy. question

year. for an you the expectation gross margin So curious just full if updated have

for year, the actualized would what say, the of back the I have front So half debt. you half

kind excluding I use rest that long. So XXXX. margin, the go we margin is quoted for That throughout to stores rate of would year, the half have to back I use the the that XX% the run continue all fiscal as year of should you continue of

Okay.

So it essentially was unchanged forecast? your from prior

Yes. Correct.

Okay.

question Okay. And for Tarang. a

was that color retailer skin in of I to another care, can growth So just some quarter you're if what's terms interest and more contributing skin offering. whether your you curious more in strong of seeing growth. give care

Yes, really we're skin with pleased care.

a about we X years skin entered history, XX-year reminder, almost to cosmetics. relative the As color having care ago

have skin and holds the our bring we can the model accessible where in skin care it You same of care best make to consumers.

So skin what's continuation really year innovation is skin care on the a of this care. have driving we

tracked and data care Nielsen up quarter well kind Hello quoted, is done what care extremely in which as rest seeing skin has being has with skin lineup. Hydration! XX%. the Our the cream you're of for of the And the I what that's

the channel is to Target skin of addition care data, tracked In driver for us. huge a

take the chain to You not I'm this skin give did also care. have year. numbers, going skin nontracked but care Ulta full

all last care doors there as year. all in skin year So year, in great cosmetics expanded this our doors second They've expanded now and They it's seeing color well. Ulta. traction of we're

Our Jon comes next question William the Anderson from of line with Blair.

Tarang, wondering in bit or trends more a international business the growth you're you rates distribution I'm additional opportunities mentioned in talk of could if you kind the international overall comments. your expansion. and about for prepared little seeing

had point to terms I would which business I the Jon. would the out U.K., International brand. seeing we has I in our This of we're Boots trends our the to good in the It's focus, in rest say customers, of year, been Superdrug. done as that similar e.l.f. growth addition In the of strong business the has cosmetics site year, growth, Superdrug. is both In biggest mentioned, breadth business is expand out starting at to chain last international U.K. particular, seeing. our full at Absolutely, very no our different. we're

-- international, good strategy a our a it's of not indication which on is strategy. bang it's So big

at U.S. we foundation countries had customer, to of XX entering and thing really then from international. the the X about we make talk had in another. good kind us that hear the is a true to same there disciplined went went going same rollout on sure we when never same the It's say time. You're I'd really

in You'll are key in we on as U.K. brand testing well. We've the Germany e-commerce see keen focus previously and effort are and mentioned, China markets other continued some our quite the

to big of this forward use the the it but remaining customers. part we'll space look in white U.S. be opportunity it will that to rollout here and So And continue have updates, we is such internationally. space with a have provide disciplined with we

helpful. That's

a back the aisles? And they Are you for care cosmetics? cosmetics minute. -- for pivoting skin there. of your is your how domestically skin just get Just products with to sense then, describe or there? to you Could co-located and opportunity distribution relative a color And happy in care retail? with color Are of in ACV to different your distribution being they skin kind your opportunity of at are kind are care in merchandised enhancement there

Yes.

the that type I our that co-location. and type It national decided where care skin it. on, care skin, we with overall does Target about to at crazy as standpoint, they that not I'd distributed have Ulta is as have say the really location And business our with are cosmetics separate skin originally need e.l.f. to with have white well full skin where skin coverage, the you co-located it and go care primary a area, find inside skin good care entire Beauty skin given we color care from cosmetics.com, makeup shelf their in space of really broadly decided We actually, set. don't comes us with put sets, We prefer a major looking regimen, range e.l.f. who's Ulta chain. really take we into But led we're idea. we distribution nearly have in are did across X if session. addition can in our care tying think when do tested the to a cosmetics to same from can -- nor so Target, a Target, to consumer the for We larger which you lead care of really it which good customers We're footprint. retailer Beauty. skin entire standpoint.

we examples of So have both areas.

if on main space see Target Ulta. I locate how preference, And continue and expand within to both set. have be to we our the you'll given distribution would done at it's enough Our us well it, care, think, skin

changing timing us I'm over kind Excellent. squeeze X the terms production your the to on are the of in anything of going to Could give of you an margin in-house and profile time? if quickly. effort more there business margin that -- consider in there update

Sure.

So we to have two U.S. main initiatives when operations it the our comes in

faster. as as standpoint e-commerce was Columbus, Ohio now mainly Those that of the one first as Ontario, our ability of complete, well both consumers and in are to efforts cost automation our California. we're saving The reach benefits efficiency automation, well lines as line and from automating main in a our reaping

in on Southern we operation, from for aspects plant if importantly, our distribution plans plant was, major our need And that initiative well before center. going really operational building year. of tariffs. is fiscal that liquid plant to in end made as the think our of should near a automate there speed plant United California, that The cost. what not here a it well certain by distribution tariffs. second as even of That that It with advantage be far we're tariff environment in automation a depending both sense from additional to our looking a where fill are savings put States better in Certainly, happens the is bottle, associated, center,

track well say, I'd both on initiatives. those So on

to the I will major we is majority have combination China advantage of a quality speed. will and in thing our you be last continue on tell cost, manufacturing where the of The

And so we're lean making we we're on the take in it making progress overall view a supply when initiatives, to global the including progress chain China. the like with and comes

from Astrachan Our final question comes of Stifel. the Mark with line

I guess, last of line questioning. one, just a follow-up the on

be maybe point, facility of that cash use Given some on talking about. strength elevated. this to the thoughts business the seem sort beyond you're the CapEx doesn't of at

on that then of surprised in in And on basis? It's a If do ability it? about the think to I'm bit you, guess leverage-wise, driven it's giving so been the curious, just growth? without how you lap there. innovation, and opportunities about talk this And so, touched think takeaways at do what coming, huge about it kind go-forward I extent were us So Meaning fairly to driver what the a you position good can growth terms business. it you of from the been, do before. a you're of how that? has what's you given details it's more point what broadly, of maybe in a successful

Yes.

on use. first I'll cash So take Mark, one, the the

So our cash position about now. we really great feel right

imperatives, potentially able to our talked are over strategic fund pursuing time. We we've and strategic extensions about

that be when would cash think you use, on. would are about areas So our we I thinking the focus those

and context You've us the modest seen of those in last in quarters, seen you've that do repurchases, makes in we'll which strategic as it to X objectives. sense blend the also continue

driver been your our And on of has long innovation, then a time. question a very on critical for that business

business realizations I was lost of marketplace. the all last noise slowed was it had getting think great our year in other when we one but innovation, the the of

items So of spend X we're in emphasis our key was enough putting imperatives in most activation on really sure up that stepping making digital matter. those marketing our

in. and innovate still say is the the Poreless a think light much particularly would Primer interested Concealer. with I And That want consumers consumer the that we a was they in those e.l.f. of them. Camo the is I on making very case at left Putty life innovations pivot, biggest have lot had shining The So we products we're sure still biggest that really was pivot speed. though, with

about think we items. you those year, the supply-constrained of very on If were beginning this both

we customers as to activate, well. them to get quite see continue we behind do As them, continue

discussed have the Some we quite pipeline of coming really the also innovations on the about today recent call I'm of forward. have more I And room. bit excited a

goes hand Project will we consumers. highlight in amplify hand our biggest we lip eye, So it those on most say, are face, proven I better of every innovations and bringing what Unicorn is initiative shelf believe innovations is with of to making accessible beauty important where would and for be our the beyond those innovation capability that with best and probably, the can opportunity, continuing to

reached call Amin the to for of have any question-and-answer our turn end Mr. session. the like closing to remarks. We back I'd over

for you, joining thank us. Well, everyone, Great.

members Over the events team in you a investor Francisco, so, there. investing and are to We San of Thanks, -- next month our attending of or York number going everyone. London. see New hope to be

concludes today's This you. teleconference. Thank

and at your day. have you wonderful may Thank time. this a You lines for your participation, disconnect