e.l.f. Beauty (ELF) 5 Feb 202020 Q3 Earnings call transcript

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

Third Quarter Fiscal 2020 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host Willa McManmon, VP of Investor Relations and Corporate Communications. Ms. begin. may you McManmon,

Thank third joining results. quarter everyone. discuss today e.l.f. Beauty's fiscal you afternoon, us for to Good XXXX earnings

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

basis. reconciliation management you President for Tarang directly We press Financial and release the the the presentation With of Vice today's me refer from Chief today Mandy Fields, information addition, In presentation non-GAAP today to a company's between GAAP Officer. Senior measures. and most includes Chief and and are the differences comparable Executive non-GAAP Officer; Chairman a presented Amin, on

call. Tarang the begin will

Willa, and afternoon Thank you, everyone. good

We are third quarter million. $XX million results our and adjusted pleased of $XX net sales EBITDA with with of

holiday were ago, the even sales the with the XX, year net versus stores, impact ago. category X% program. was smaller In cosmetics color e.l.f. Excluding our dollar year basis XX XX versus points a December ended, of weeks up XXXX share X%, of up short-term

XXXX grew are our year we of five strong color we Reflecting the raising calendar For share. Nielsen, top guidance. again brands market mass cosmetics the most in results,

you imperatives year. five that through results these over relentless have We on focus strategic we've past with the discussed driven

together our I overview imperative, how and encouraged our you of a about brief strategy Let potential. me long-term why give am each works

to first about of rate a the pushed revenue for points imperative the spend XXX the approximately and below platforms. was our across demand ago. quarter of Marketing strategic quarter. fourth to This continues was objectives the the year which our of some versus e-commerce brand X% spend driving with due exceed expectations was into success in Our XX.X% basis timing

primarily engagement, like the We growth conversion value, as of are looking external as reach alongside our exceeded at Search line well metrics all internal by and earned on our metrics measuring top which Google of expectations. media success investments

discussed we of e.l.f. Last face. and second our are month campaign. phase which quarter, its our campaign this we to the making awareness our on beauty launching lip of eye, success, the #elfingamazing further of best will every accessible Based amplify mission

of million challenge. brand has a users TikTok shared with created eye, previously it the TikTok over over The face user results our challenge. lip, challenge record for videos, billion early We now X gone on X.X any

want campaign these momentum on we an as face the numbers a song are backdrop any creating measure, to seize that While underscore. it's started XX-second user social original by We generated ability videos. impressive our by to lips, to eyes,

by learned we called and that new length we new the of the journey, with By rocked close, importance XX accolades, TikTok connect music this also records. the a Label on and face the of in conjunction Forbes on social and with It in being campaign approaches one face this partners eyes, Among influential many showed digital landscape. campaigns open as most in video awards strong also imperative the Adweek of nimble are Republic this the us featured XXXX. Throughout lips, full eyes, Billboard's to our to Year campaign's lips, consumers. evolved XXXX TikTok

in empowerment event With and brand built the beauty connect entrance to times annual with including Jen vision joined with us industry up This a keynote speaker, amped beauty escape compared and on partnership, values hairstylist, November forward. XXXX. prior Bahamas fourth Atkin. entrepreneur in and e.l.f. it escape an X.X celebrity our which of similar to we paying innovation including year's years' eye hosted Finalist 's proudly event reflects beauty leaders to

cosmetics Attendees classes lectures Ultimately, careers next color to winning their who beauty escape. they partner prize received take master our were team a introduce will competed original in and cash their The in to the vision attended attended our to through their love national handpicked of this teams summer retailer present beauty best and level. for e.l.f. collection capsule. Target, together exclusively also

show. we nominated two in ways awards humbled efforts media new best branding Webby the in story, Awards at also including As Reggie of receiving. three to tell we three are We been continue for our creative recognition are to January and We've won explore our recently Awards alone.

well to continue up with as X ago. Instagram more our million, in efforts over reaching result versus followers XX% social year followers Our

second major digital imperative brand. step-up Our strategic hand-in-hand in goes driving demand in a with the

seamlessly our to experience. Our together consistent digital efforts channels tying on center offer a e.l.f.

more As stack and front integration Dreamforce the at salesforce conference salesforce’s beauty sophisticated. service. of platform e.l.f. effort, marketing tech and the was commerce, only company increasingly across utilizing part customer this center is becoming as entire our cloud

journey e-commerce of X.X beauty digital squad launched engaging over for members enhancing to service to for customer we the our To when engine sales. who more million few in our a our serve personalization of initiatives, these consumers progress e-commerce account e.l.f.e., highlight we our make the XX% third XX/X, quarter consumer

served Our consumer views view online. personalization single us to being of what’s past likes the and allowing to incorporate to offers a them customize purchases, efforts

easier make of Perhaps can most Google and consumers launch we and results even saw on implemented solid receipt suits our the purchasing have Beauty with way is receipt the further data that conjunction the more will of Apple connecting In phase in personalization. scanning, e.l.f. them. the enable mobile in experience. new best to app in enhance to pay us Google exciting early we the this, Afterpay which e.l.f. Squad To so scanning XXX

of Poreless Primer, the holy of skin imperative this third time which Camo and around mentioned product prestige last year. quality introduced cream, Our providing hydration advantage. were success first our for competitive all drive Putty XX-hour to We’ve mass to continues Concealer

These and Hydrating We’re request. Holy Putty products Luminous fragrance and holy Grail created consumer Concealer these building on response extensions proven extensions e.l.f. Primers. in including of were to Camo hydration free,

we new our are is new Liquid on purchases coming introducing new Grail into prestige XX% products which $XX from consumers bringing like Glitter equivalent. Glitter Eyeshadow, These compared $X Additionally, Eyeshadow the are products Holy Liquid to brand of with elfcosmetics.com customers.

SKU top Liquid Beyond of items. that we XX are introduced Glitter elfcosmetics.com recently Eyeshadow, are five encouraged our on

deliver new deliver continues and to of stream best of strategic ability value products the imperatives. Our fuel our extraordinary that beauty a to

focus key expanding is our of care skin areas our offerings. of One

Hydrating Hydration seeing We’re Booster Drops. products success Holy with and core like Cream

new in to a our Cannabis elfcosmetics.com push Sativa in continue area its such five its in introduction pace maintained top as which line, since November. on also our sellers has We steady

skin overall to XX% business show Our in QX. growth, strong track care up in continues channels

national entering Unicorn, shelf. is merchandising its on centered third productivity the project at is strategic fourth phase better that improving retailer imperatives guides our visual

into implementing each Going over merchandising. retailers featuring across visual resets, spring we’re planograms new XXX different our

space, In in U.K. our have we grocery additional space in confirmed terms Boots some of shelf in the

further expect partners decisions later the year. in We retail space other from

Target a third wave our our the program. new the flex to see as best quarter impact and partially merchandising we example is of flex XXXX Target provides also a these our driving towers across incremental productivity smaller offset next strong products. to better in both vehicle retail which towers Perhaps, which us The space national Unicorn results partners. holiday showcase continue the of this shift is

national at one Ulta at strong Performance the with momentum other retailer across skin tone was Beauty. being highlight chain full

and reliance we business international overall years reduced ago in on down was the as made We today. international QX Our paying in it's off this shift U.K. several distributors.

the particularly quarter, U.K. retail In our Superdrug and growth strong. Boots third key within partners was

to momentum that expand double next presence over space XX months expect at as more our Boots the we at We to incrementally Superdrug. than continue look and

Glamour event medial Glass the quarter, U.K. there ever and In U.K. Glamor The Beauty from large and increase beauty the reflected consumer attendees. earned saw scale the XXXX a our Festival fivefold enthusiasm in in held U.K. nearly awards we first third our in in Cosmo, value was with at we

more a award Superdrug supplier best also Primer. was We bringing receive for markets, Putty new quarter our for Poreless activity the China were cosmetics from our from of new In pricing, significant to in launches. other an more a and product This important way. in launch pace China to honored is XXXX control to our meaningful better the a for allow move in-house marketing which business e-commerce us market begin distributor, penetrating the

suppliers note miles we are China, e.l.f. are closely of XXX at moderating terms key and our In labs regarding least We coronavirus. offices, the Wuhan. from developments that would

It We a diversified impact later geographically other New have Year. chain is our start-up Chinese post too to deep a within than operations the and know to China. soon

annual our closely of Shanghai in have are We who network saw we e.l.f. team submit, an we with suppliers just during and amazing working and them. strong supplier

those impacted with by and events. are thoughts Our recent our colleagues

investments. fifth our on demand Turning our driving generating brand stores annual to strategic of in imperative brand. $XX.X February. cost spend e.l.f. our savings branded redeployed million I'll our fuel imperative was in XX for reiterate help last initiatives savings stores that most We closing cost the strategic particularly the important to

in benefits seeing facilities. warehouse also We're automation the of our

our start weeks. new they progress. the and favorable facility next tariffs price in terms summary of Mandy Southern fill California should Our in dynamics driver we're remain and discuss operations of six but seeing in liquid margin in will manufacturing increases what a gross

in in a strategic imperatives category. execution Make no these growth down our mistake, to has led five

We term on FY our longer call. back XXXX will our Meanwhile, for touch provide the guidance like model QX step I’d during and to company.

growth. so, XX-year share the I'd was This seeing history, in Of we except we’re reestablish calendar years. every like to it three year over done year model the grew in Having to XXXX. next critical us what for almost

grow we share. the can the we are believe we in brand, With continue building momentum to

we We optimize our has executing when also our retailers innovation growth, consumers even often current to time love, internationally. get and significantly national more space an are over on space been that a in in space. to shelf With time. learn our believe Space opportunity markets new that believe why imperatives. It and brand have productivity, focus grow we strategic that's will and we takes gains we episodic shelf

Over major low strategic or the without expect in the years to extensions, compounded digits. space we line additional top growth next annual mid-single three

As we this that space grow should the extensions, business high mid strategic layer to believe in the potential is in single digits. we in gains

sales see we with both comes In cases, that growth. leverage

this long-term to both sales outpace growth believe business. bottom net line in balanced makes adjusted one We the top that growth. of and EBITDA We model expect growth attractive

success in which One with expansion me year business, from over in infrastructure and concern of There this XX% in our margin is much model years successfully taken few on things early margin. navigated we this in growing gross our of tariffs margin the a first to slight gives have confidence ago team so the impact XX%. form the the of in is historical that in the We’ve reinvested in recently gross support. more far of brand expansion just and

leveraged We we've believe that built opportunities. and that team be the growth for additional can capabilities

of almost to Our our differentiate strong leverage gives $XX million brand our cash pursue can end at opportunity and position that strategic extensions portfolio. the of the capabilities further us QX

believe combination with provide our spaces cash categories We include We term acquisitions adjacent the as well own our well strategic in potential. creating brands. in strategic good as growth imperatives tuck-in confidence uses in believe small such further as short-term and as longer of extensions

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

covering for QX highlights, Thank the Tarang. you

quarter and that to guidance. was quarter raise able strong another another It we're

term discuss and our Let guidance updated longer third me the quarter model. financials, now

X% from Excluding e.l.f. stores up ago. year of net were sales million $XX

December throughout program Our impacted data. the channel in-line track strong remained solid performance despite which holiday

back You seen Unicorn Target. yesterday's which Nielsen in a in bounce may by partially read particularly aided have was already merchandising

compared Gross price margin points basis increases cost savings implemented innovation, was FX XXX prior along of in XX% factors the to primarily margin and by with discussed rates. including year other the favorable driven second we we've quarter accretive up

tariff. points of at very basis lashes deal phase A portion benefit product signed tariffs the remains Year-to-date should the margin. I X under our mainly level. remains gross that to has note one-time a although XX% tariffs XX% the was also also X.X% FX contributed on roughly small our XXX of

closure of adjusted increased in by XX driven last an of initiative XX% sales stores. bonus our primarily a XX% partially offset was year as SG&A accrual and e.l.f. basis, marketing and up On the percentage from by digital our investment

sales the ago In X% marketing the to third net quarter. was e-commerce quarter, of XX.X% in spend year and compared

revenue to been the Therefore, expect as percentage next have e-commerce we quarter. marketing third shifted marketing some a to During net higher and spend QX. of quarter, be

quarter. in Given see for and XX% EBITDA top-line gross by results, spend at fiscal e-commerce $XX rate the margin XXXX. XX% sustained million we performance marketing to still expect the QX for was to driven of adjusted

a and in marketing margin our margin to spend shift for drove quarter. adjusted Gross EBITDA XX% to the QX

margin see impact are marketing of as EBITDA as continue normalize to tariffs adjusted expenses will we in incurred materialized. those and expect QX We the

compared diluted was million that $X.XX $XX.X discrete had year, tax net Last Adjusted to share a this related by not or $XX.X we income benefits compensation to year diluted benefit a share $X.XX million or per did ago. EPS have we $X.XX per year. to stock driven

primarily of $X.X million X months nine year quarter, service stock our cash bringing million. to In flow enabling a driven balance a our $XX.X million December operations was bringing and we capital cash the us generated debt our balance we of For by results. fund stronger million The the compared cash December $XX.X to total operating to million XXst $XX.X third to approximately ago. ending improvement repurchased XXXX, investments from through

remained five our focused priorities on in investment strategic imperatives. Our

to exploit in and enable our extensions that we can investments growth. to As we've Tarang fuel made platform us strategic the discussed continue long-term leverage

to our fiscal turning Now XXXX guidance.

end to versus XXXX up fiscal to excluding year fiscal net with expect e.l.f. X% the sales stores. impact We of X% the

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

Our be is expected year. for XX% tax rate the to

position the strategic progress to about imperatives. in we optimistic our against look market we the fourth and As we're are quarter, making our the

Camo related on launches to However, in influencer as our drove activity the Primer we to Putty a last Concealer comps line. remind organic cycle sales bit positive and we Poreless effect XX-hour across year. and launches that growth want QX These start tougher come to halo a strong you product to sales

to tariffs materialize. Additionally, see we expect gross impact margin the to of continue moderate we as

provide From margin expected XX% perspective, continued than from the EBITDA range an as we've up to last stronger to XX% XX% gross XX% year quarter expecting for the adjusted we're see to margin. margins

higher into earlier, materialize stated I putting expenses the adjusted you QX XX% by margin full-year in a expect of EBITDA shift As adjusted QX marketing XX% was these Therefore, lower XX% in margin should driven to the EBITDA QX. the range. in as

high-level the let discuss turn call me questions, for over long-range on model. I our view Before the

sales three the and driven said Tarang growth strategic years, five to next As expect profit over imperatives. by we delivering continue our

is low expected space mid single-digits. growth Assuming to don't strategic shelf significant we add be or in the extension, sales our to CAGR

we growth top-line space anticipate be successful to integrating in If we're or achieved shelf through could both cases, those SG&A. and and gaining COGS add significant In of the mix of additional overtime, adjusted strategic algorithm. annual cost points extensions anticipate growth savings will and/or we EBITDA a leverage

Accordingly, single-digit to we reflect CAGR. our model a could vectors, all execute high across sales mid if

are and months. performance. wanted on each to but We we progress we you when updating on will year sustained coming more in believe We to detail you our give forward the annual to provide guidance our longer-term give well overall perspective growth positioned drive look

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

first Oppenheimer Co. with is Our from Instructions] & with proceed your Please question question. [Operator Parikh Rupesh

just start on - guess commentary there towards more I sounds call has extensions. like you the strategic been out these So,

how get sense So I capital at of as versus thinking you just look to you're allocation, share a want buyback. M&A of

you look the side As I just there? skin at a is M&A, preference all guess thoughts there care, any at versus on so between makeup

it's that Rupesh, and take question. go Mandy. Hi I'll ahead

look things. really a at strategic we we as look at So extensions, couple of

we looking the top brands some past a talked own. bottom on builds that at years. we built something about tuck-in XX price gross on like category our really, even we're looking adjacent that for in and or and So, strong we've for leverage either either profile a But capabilities looking brands our creating over are capabilities small also for line, or on different potentially also the point or

So be operationally at, looking accretive that path our accretion that's and look or something something we're also through a has overall, we distribution would clear for network but to overtime.

mentioned I Tarang around know those to smaller really been we've we but heads think looked at next, point. our that so we've and looked point that aren’t these for at asset one L'Oreal highly overtime, in tuck-ins are outbid at time has this going I disciplined at we as

And just had strong tariff one an QX. just sounds margin then like was on it Obviously, QX more impact gross of line. and question the follow-up maybe in the tariffs you performance in -

performance XX% look your to is XXXX I you if gross So level, forward? guess at going gross guess FY for level right a way margin about sustainable like I think margin

Mandy you. for

and XXXX Yes, that. for speak we what on I'll fiscal expect

our in XX% over we've Tarang margin XX%. mentioned, as year-to-date to instead So grown of

range So did QX basis those XX% offset. we're of points to I that into to acceleration we with about the discussed, somewhere XX% able expect would We levers the to end but tariffs the to range. that in see year XXX in continue

points of probably XX% is XXX so And FX XX% you think as was one-time right basis number the to impact, Rupesh

right. That’s

Given should done. that we have

question JPMorgan. your is question. with Please next Our from Andrea Teixeira proceed with

Tarang understand Wuhan. your I understand still from wanted if to they’re are are more struck I that So, embedding is And materials if the the close raw And and in concerned fourth I if any out suppliers the factors probably you’re you supply these you about loyal the but chain if are risks that mean disruption operating. distance - the or quarter? and causing, I not disclosed guess I'm believe that still

the still into is it’s products again would So your the as fiscal long fiscal something SG&A point, percentage sales. come a and to, side just know XXXX but that how is it to of is clarify XXXX on point elevated us And and the percentage in. quite on just I likely safe update these and second

grow the you you. So top I leveraging wonder of when that think line? we as more Thank should

take and the second Mandy one Hi, the give Andrea, first I'll question.

FY it's China tell. for tell in early too XXXX I'd of So, to you terms

very I that thing and Yes, suppliers. employees with. who are colleagues and the infected our I'm on our of as our suppliers all protocols. working have vigilant checked with obviously are extremely think immediate with been or health are the proud we our hygiene closely we is thoughts of Our none very best our families

that part none we is the have their reported of any either, of from but of is in employees place. put Wuhan also have issues protocols part They think distance had I the

with from of advantages our say would the in chain or overall approach terms one it standpoint. China, main of In supply we I have continuity disruption is supply our

is dual of single of items anything. First all, not are one every resource we source our and

move So second reset if growing every issue, an to month with the We the the we've some New thing around. is we our facilities into have Chinese was volume really ability in See these there in Year for because go of here springtime. a inventory shut we happen year. levels to elevated

we're of on. not yes, our sitting months’ and what customers worth are So now sitting right inventory include about six that does

So continue I the this for right but certainly is think monitor we we’ll now to it. situation evolving pretty feeling short-term, obviously and are good

We be good track our very our have of to able close work and a in very them. with supply ability record to we terms customers

helpful. That's

then the point. SG&A on Andrea And

any lapping bonus you we also that bonus that this that we and was quarter expense marketing we quarter things versus at then were the accrual. and did so, So we executive this two called driven were last bonuses incremental X% so in quarter at really recall last out, accrual by this not year. now At that SG&A having not year, XX.X% versus this with pay included time as

combination algorithm, some we have baked into term longer our In savings and/or SG&A that. of do COG

as three should next we talked, the you over years expect time savings over there. some so And

mind Is so bear Putty and know then the I Right, in it of discussed with now Concealer. a of I been Poreless you relaunching that thank obviously like phasing Primer quarter things the consideration you've if that one of the fourth and it. and you the also in is and variations Camo also like like - much

tell done of that? wondering your was have we're what that massive is just just lapping comp like So in and impacting so you guide the of well if because embedded kind like they of can us

what now kind basis. guidance Yes of as two-year right really seen we’ve X% the a on trend X% so, the to a reflects stack

on high end on a look and So, low the picture two-year about for guidance higher the the X% end. low of at range, you stack and the about if QX on X% end

the in Poreless seeing have really just seeing, so far. we the out So encouraged trends to we Primer that line do Putty with calling are by are but cycle that that are we trends we that

to good five our And XX think now product in items as mentioned top I a start elfcosmetics.com. really our new off program is of right I

big Our Liquid so items by number our the Glitter our Poreless in comp start we products a Camo Eyeshadow on while Camo new of just those. Concealer, and like Holy encouraged a last month with overcome products Hydration, or and the Grail introduced our Primer Concealer, Putty two we to other new were have

Piper next is Erinn from Murphy, your proceed question Our Sandler. with Please question.

have first questions you, picture for I question. a bit little guess a Tarang I bigger couple of maybe

for I the and fact As they you XXXX. space go mass right obviously like Target, you thinking several about allocating just that juts do How industry think as Walmart figure feel for it’s now category? in mean XXXX, about now. bigger beauty talent years into or forward

clear years? just it's but curious I'm or gaining allocated that beauty versus being you guys seasons on prior to that share just shift how and prior And may what's overall, are

Beauty our We've between but for They've Erinn, that’s I seen Hi, shift incredibly same allocated is look case can of more some you have the Beauty, with Ulta overall. Target been any attractive of beauty for is obviously you the would Beauty still retailers, and sector Walmart. subcategories. what space tell

poor last for years’ we trends having mass So, skin than over the talked color cosmetics example. few care,

shrinking But, is we the kind the of that deal priority, major customers with least footprint. for beauty strategic don't footprint of we at overall all that where foresee

and your profile have of growth well. what's terms allocation of we four innovation those, decisions what consumer that it scored and extremely all productivity In is comes footprint of within level to rate you

to up am to ability space. I pick more our long-term So, of highly continue confident

provided two dimensions is spaces we model in a long-term episodic. why reason The different

or be strategic see. space to wanted extensions we so growth do to we major what of And give gain without able a level perspective

that looks like. that what on then you And when layered

they and am a terms I a then fundamental brand. our So, a of space for performance the of long-term have get to of retailer I'd say number in decisions short-term, ability other encouraged often besides both

have I those is number think kind go. will a through, been and a they on brands come them and exclusive of focused yes brands as one lot testing of of headwind new there go

I think players. of well-positioned legacy we are regardless those poor

a real on next of to that do relatively the year range assume that, at today, kind you low are to end follow-up thought just the maybe any what similar into the are stays long-term the there category? we plan mid-single, lower at then And category of change improvement in

model made the We current category long-term inclusive of trend. the

the growth. category in there able with So, with we pretty without strategic that's down it’s level believe space to why in to assumed that our growth down of category extension the live we be

to And second guys you like XX% next general sales that this level really year Mandy down, short think kind then think in into mean, and is have arm just about XX% to Thank to kind thinking the curious and brand think for it momentum right come within marketing my plan? you that of reach go if the you starts question this a a I I of year that is you. about the you're of just the of framework and was three-year or how on

see it at really about now, fiscal with. said we that, we I the think Yes, least Right where but for we comfortable XX% guidance XX% the is haven't XX% we say that that's think XXXX. so beyond area to XX%, to as that we've given to feel

Weiser, Please question question. next your Davidson. is proceed with Linda-Bolton Our D.A. from

you and talk more for thinking your penetrating bit international can countries you be decision little just a in that the elaborate to would use direct regions do Thanks. then on your you are plan and what plan markets or further? markets, you Could about about other international distributors to fewer go

Linda key ago so similar strategy in our international U.S. to our Target than key our headquartered strategy accounts Ulta which really Walmart, of where Beauty at our and other channel have a we year with could direct where in coverage drug a go we more customers. Hi, the began to was directly

a go we through company, of where the with of you international start any flow distributors. lot As a

You figure you to want out able which be keep. to ones

being to example, made better we we directly directly Superdrug of few and in the results Boots. go years ago, just for as Well, a that U.K. saw to much shift, able to

of have other while terms testing international markets, within a in countries Europe. we for Germany other and been are In the brand we Western

within Our that from business an And big a e-commerce you to make continue of making distributor each more a and will never bang directly was big move kind right but really executing country is Asia us. actually will how see go important and standpoint an the country us way. we're go sequentially move the really from taking country, over of for China sure focus be with after we

said do And locations? in other more are can the are you where like are maybe then or information there the manufacturing reopen Thanks. there specificity or have region and understanding holiday more that issue, you on extended you is Guangdong will just be facilities can us your a give XXX any follow-up the little slightly think or just on period I your coronavirus miles would that plants is north, after further that region that on different I your then facilities away, bit in

very supply both distributed. so Linda, broadly and network Sure, our deep is

around very in in the and are be are Year Chinese seeing Shanghai in we we So, we the New shipments country, right I'd to production week that had tell different We various have in of and did go plans, we’re of have parts area production ready scheduled close. terms where shipments. have suppliers you to before other But next particularly we regions.

from quick is U.S. including kind and proud support the working so very very It's our involving together of a of team well everyone dynamic situation, and how just

I answers hope So, that your question.

than near our to all in talked being closer other and facilities other are the disclosed have of haven't past We where and regions. Wuhan then Shanghai we

from question. with Our proceed Please Steph next Wissink, question is Jefferies. your

your just retailer reminder that for can with on currently? space you how diagnostic you am first account just biggest you, shelf you each Walmart, update are us where I Target, at a sets - trying quick your three it’s question much a the are Ulta, you give have

customers probably Then would average at of some well sets long Walmart's developed business right on now X on think footprint Ulta X about most after footprint X think terms we feet well. you’ve I our in average that feet foot an and on Sure be about would Target is about foot in average XX I have been as so sets Target. so in as X combination and of Walmart,

we the term longer footprint us retailers Target find of confidence we have in in footprint which the So most we have less kind of terms gives of than that at brand. X.X the that

channel we’re foot in predominately the much Unicorn I of in think pretty sets, talked room kind a we at including benefit should channel still around in every our so the drug I of have Target. grow were about and that flex mention bit innovations I also to with vehicles really been merchandising our an products our of highlighting as room towers well, has for quite key terms additional space of grow. new form Holy and there in flex and Grail terrific new us a these so still X those towers to

as you on still the care what a care opportunity? adjacencies the percentage strategic extensions I you question reminds my us, about skin is business sun but about for if today then talked skin just you sales see skin big that and do care, growth strategic And know of body how

see Care Mandy. Skin we big opportunity us. this is still Steph, Skin care, so yes a as for

skin extensions skin mentioned those adjacencies I about about care mentioned, would consider. quarter definitely of XX% when strategic and for care us that would in the we think we and we be think As definitely one as was up

there it given is even in given for is in of overall lot only see almost strength the of And small the We kind skin care color growth two a part XXXX in years cosmetics to we still three still momentum although quite see range. pipeline. this in of years,

with Chen, Our proceed Please next and your Cowen Oliver from is question Company. question.

was what related great opportunities, Regarding been Project very for of what how all Unicorn opportunity focus, does with to Thank that and is pricing you’ve inning had that thoughts marketplace unit the you encouraging? price are you. sounds space Unicorn with a to a and seeing it your increases, elasticity, the relative on response in with it’s apply you've so in big are that lot the success what

take and on been us Unicorn our ask terms really each Unicorn. I'll retailers for position first great merchandising. elevating on a in question the one in national our the shelf to pricing. has Mandy of of with on Oliver. success I’ll Thanks, take

on six navigate really We four focused is set; visual have our entering for merchandising, consumers key we'll next innovation particularly being better phase Unicorn bringing a Holy of are Grail able being over better to of the currently are those Shelves currently which read really the weeks. to that. shelves to third better the

that last changed then our terms more think phase read year continue I where goes talk here to So, Unicorn reasons one in as a going visual and merchandising to be to able other we of us you're from about of year the and do get very Unicorn We the we made why fiscal hear to for believe space. in, increase from much case as can well merchandising is as improvements makes we’ve for visual there we us productivity. that as standpoint good believe help that

point hold we to Yes, but so that continues what basis benefit be pricing hold true there, last saw from the Oliver having us from feel and in some having to elevated we XXX we and pricing continue about QX on impact give to we pleased to quarter think we pricing. I with that's talked a continuing continues see side, what

And TikTok?

go Yes, ahead Oliver.

thoughts emerging job as how like platform as TikTok the done platform you you’ve but and we some love on a expenditures? your TikTok operates to with remarkable dynamic The and would units versus allocated would a see that sales platforms of other then and much digest do of marketing like other How file involving congratulations. percentage question be evolution

so side. let the on on unit finish the piece electricity me Yes, up

terms of of units initially overall continue back I down of see kind is engaging but So one priced consumer. experimenting mean things recharge, those core on so I'd getting of I constantly brand campaign. we our ways our think been do part an on that and the roots finding also gives better about what incredible in and we some than great our items say to then it's comfort. really brand of our modeled with to recharge TikTok And we that it's us

GENZ/ platforms other on see with but we only definitely viewers do emerging that we but not billion can our really campaign generated the seeing, TikTok user has X what community in well, what I videos And so much our going in not particular as TikTok only over TikTok fact X.X mean We’re we strength more and million it's amongst do does.

In shadows sized with the there new was do posted. one them why couple in for of sales videos over video to think as the elfcosmetics.com of last one weeks. I our are soon on, two nothing weeks sized last increase almost couple XX I'm were we five of bite of encouraged bite that really We items our is by that saw had went viral of shadows

that platforms consumers not a lip great millennials there only are exfoliators, but of go one for business going Similarly, we to experiment I increase core the you’re Gen retailer exfoliator of our viral product a we video ground. kind and saw on the time ways of out almost Zs some had to see saw and see standpoint up from these we've is place terms major particularly in we in so our our lip sales, translation and to think that quite continue a Xx our with this one and products another engage again

line brand brands. terms what pricing would another so The either And brand lastly irreversible think the in of creating aspect an seems as inclinations your opportunities you e.l.f. are or why opportunity. extension about creating be pretty of

continue We potential the we e.l.f. have is biggest certainly to grow believe

in these great our XXX% amazing e.l.f. We bring say that as belief not continue continue to footprint, have tremendous to of out broaden the innovations franchise, more and get in potential only our that's consumers almost focus. in you

seen also experience brands to space us in a with a products the to of see made different come be investments given most one that part we it benefit applied as take in priced or to multi that said we of potential. of the being potentially other whether leverage strategic the across of higher point our where of examples one brand the can our quality or benefit Having and different able through and the price adjacency of be of we've team putting brand new capabilities and

your is proceed Our next with from question Jon Blair. Please William question Andersen,

number I for was where there one, well. some booked boots during it I XXXX could concrete be with three that wins A opportunities on hear are that shelf retail maybe perhaps space that national as think maybe did were I some space and Tarang believe in XXXX accounts you've two there and made space decisions already question, grocery the in mentioned shelf in the other big that U.K. Number accurately

John. Sure

be are months. So confirm grocery you space we heard as over additional to footprint boots where did right we that in XX next doubling and pick up our going as the well

place remains have Wal-Mart at so - believe our space opportunities one at opportunities way we more long have our and could isn't we I go and still are customer there. really We biggest think there, this everywhere have space there we a under don't our largest opportunity to

foot foot space But recent sets well. target from an X seamless they’ve up in drug with in earlier and past even we as X are this experience taking inch to and finally Alta our then already started year relatively

in about talk where are XXXX our So it later better so to what to they’ll be seeing decisions a guidance we be. are for come we and in position XXXX-XXXX and will those ready would we expect

decisions those shelf way kinds made the of automating what's If to think were implementation? for XXXX about timing

it. implementation level now of sets ways kind which of to are have space and right for just done and grocery about shelf is timing is really two One which talked really the we the the we’ve spring is Yes, about think boots.

but be are lot it they each be a their space, the retailer when went fall additional space decisions. this again if and of going on final in as in of making terms varies to strategies by of year it'd retailer there space we through, For was depends

that question I it seen minute back back positively. take of it now all a sounds after a that had that to response kind still around volume like market on better in and but of to to kind ability that volumes absorb increase pricing in the experience how for your and you you response in you consumers to than of pricing get typically is inflect long have volume circle plan the shelf just on expected, is does and implement

Yes, all that your so all as just fully and and channel QX, we And data you started pricing question in that response the down, is spoke so to AURs elevated implemented reflected elfcosmetics.com. see retailers break in across of about in data. yes can

probably that said I around inflection to to expect you price need modeled come I when In before units still But better that back terms but unit again. through some as you of increase the time than are we you cycle units and negative. think you see

supply color different make similar mass Have cosmetic are other a you chain? price situation increases given of to or brands the had in nature your

took Yes, which way the segment was the player pretty of lead we different. value pricing our much so into often the every lead value worked follow nature enterprise

certain kind across all their them can't of of of skills. peanut many percentage buttered approach Sometime

we We pricing. seeing taken number we of where modeled, of felt good our reasons or to proposition I think SKUs we are one value have but that's better news execution to the tend we we why that target better pricing had competitor much where the to and a competitors is take felt might have

one. quick one Just

like are capacity, terms capacity it the liquid be of much facility sounds close starting how you you quickly for On production overall will how demand? you're what looking in in meeting guess to facility fill able I bring this that there, California to Thanks. on of out

Yes.

but that the remain disclosed six So main any before source curve the there of certain have a is which so startups up we we’ve facility of start it capacity to weeks potential. our big next It has we volume than China a expect continued our sometime fully it level not have small. would so a probably in portion we would of needs of will to our facility. other bit a of as I capacity. for start-up volumes pretty what that accounted over of quite we see say

further of our and standpoint We a lot to talk tariffs are lot have really unit are if sculpted operations some so well us a before we that out to that go do time. center be to about it for we distribution so automate what that's certain closer hear from quite best going facility to

with is heard seeing supplier have the various we that from cases in efficiency we lean mention annual there. of other with the really can generate of we’re them suppliers savings there lean our came our would And gains a the initiatives that continued and some good thing Summit applying results I just number China great been techniques back and

proceed Humphrey. Please question next Our SunTrust Robinson with Chappell, from your is Bill question.

mid-single for growth actually your in high, mid we when ago that was all shelf about longer Tarang digit remember and years two lot when space the of that as I to you at both get as potential comment the a that get I ask that. only because company guess gains term meaningful space decelerate guidance longer you it sales grow to kind more and and for wasn't much to started Target space of shelf Walmart of that and it used got seemed into quite ready to kind took

Walmart of add I you we grow code recracked - that you expect Target feel of at kind continuous a Or lot like you've at get So do - Boots is and mean should faster? can the other spinners the space space forward at into and lag looking places. the or as kind shelf or these or

optimize What even Yes with space would kind the Target are now of thanks of a correct a bigger when as that to but take of we're we footprints along as and before further Walmart, you space. it even get to we one in is a we Bill. company that our say I improve see space start terms in while ability does productivity

of major And long-term strategic absence digits the contemplates category. scenarios, without the a in low our to mid both so extensions model really space, down

And but to I a standpoint. that terms more And you extensions. mid of comfortable And CAGR two much that growth that really it's in single-digits it's from gives feel combination us that those space major we range then some in the well high a circumstances. see confidence overall, years, strategic as over the of think so lumpiness CAGR, as three can in given with

call lot I just to the in mix. hearing than used on ever nor another that more term I'm didn't this then hear was a And it sweet

there there out now the - okay still opportunities on still kind that with is margin and on right now or it's is burner. are back materials gross a everything So of pricing and going there on

believe sweet XX% No, margins over it's to as is, ability in it's accretive the drive the I savings kind sweet in margins of a we always gross to the be those cost a reminder of the to say our gross combination there is know sweet our innovation, for and part mix on how what and of we company, still a this from really don't margin mix up. balance margins mix many got XX% would is who in opportunities.

liquid we're facility further. making both as in gross We I mentioned of them margin California lean improve to in there well of a a terms Southern opportunity manufacturing our fill improvements as in couple is China. believe

a value John's to we in from greedy we and to unit don't believe lose that consumers extraordinary be want the standpoint velocities know volumes too However, and us where margin get earlier on that for. unit question we gross also careful

more So that value. we'd of the or on we and a well high continue basis could bottom take extraordinary to reinforce very cost progression the to quality to either take our make to some line

we're earlier, gross some don't of to high of a for We say margins our said kind margin level sake stratified Mandy right now. where with as are we really get it. want we're, to to So have effort concerted the

for there and with. quarter pretty I FX of level think is we took we're our to this kind margin you one-time comfortable gets XX% a

Please is with your next Citi. Wendy from Nicholson, question question. proceed Our

for in sales, their because in Cody Amazon that's and of Amazon. if Most elfcosmetics.com been a particular know trends as website And wondering has remind questions answered, Thanks. percentage Amazon? what past, represents out in online of current one Ulta, of Beauty area as I us sort been with a just It general you can you're on much your to was seeing and specifically but strong channel how regard had that interesting sales a the and on my you I'm something called have I across strength of quarter.

haven’t our much K. we disclosed that, Yes, consider how we piece so is when about of pie talk the the on it will really that Wendy, we

elfcosmetics.com we K. I was Amazon, issue more the that we on to think our let and our stores when the that. talk on And then combination of I'll disclosed last about so Tarang thing come

digital in throughout and the as an been Yes strength so, retailer.com. year customers across well our I'd that's the overall as has elfcosmetic.com business say both us for area

So, we most at ulta.com, at trends recently target.com Amazon, also very we've walmart.com. seen seen some have trends strong and but good

to double earlier benefiting believe and able that of the from do on we we talked what there. digital all us, For are about I are down initiatives them

had Now third the growth retailer.com. for would quarter we say strong a the at really I

as elfcosmetics.com confident we not this yielding been about terms Elfcosmetics.com efforts in ability XX% the great a business data off efforts so efforts retailer.com the a in did us. ago. as it I grow of did strong because far We through was has what we really quarter our our terms promotion, year where and in talked more and to not about third those personalization. of repeat other mainly And feel feel are, much we and those are year

still strategy? over that’s the like the but So changed your you’ve - still of priority long-term, elfcosmetics.com it's kind not a is

No.

away to from picture direct-to-consumer? walk Big

digitally No the I I very mean mean brand, only native we’re thing.

Yes.

our down elfcosmetics.com, to always Beauty digital. going of imperative benefit focus started, was the of initiatives had focus so double fact do and about when second to Squad talked program be kind our we I We it’s can cosmetics.com everything we and All whole top on our a there. our as and in strategic

that the well. a else, engagement absolutely our everything consumer engine it's no, as it’s of part drives major So

your Our with Please next Astrachan, proceed question. Stifel. Mark from is question

we wanted model go of think extension, get the to three growth next see I’m on how things or more shelf thinking next I you major guess would looking gains? we’re guess you quarter I to to I with guess and holistically just, kind as towards curious into start space since Boots, about year I minor about you have you are long-term those and major I two to don’t high mean, so end But with guidance. it. the then those about consider Would the year. thinking

you coming margin reset in talked shelf growth, year fiscal about talking the you're about fall. So,

it a fiscal guess from think year each about to is terms of of kind when more flowing as growth we on next a is to year. do how I that of standpoint calendar it opposed happens in the So fall dynamic and through reset -

there some could be maybe So helpful? commentary

the the on in are that space retailers like May, talking not When so Mandy, really space. giving differentiator major you’re about and the its we that we between minor. on consider gains three say long-term from I are think specific XXXX major Mark this right fiscal we guidance come but major top - we time, model we’re will at major, would incremental a space, talking

I how differentiate those. that's So would

terms resets timing about calendar the that the in then could Tarang about shelf to again of of it as And spring and growth from being then and be fall also a when XXXX reset. well. talked standpoint think And as

growth to start the just we can you on see how so and when we really, that space reset when the with space, happens those. depends quickly And that is those it then get associated when optimize

took and historical the department. And touched space. big and Ulta end part are have is store, recall in space you on then of some saw did they they picked decision. themselves of not stores it their doing handling some combination the evolving time They up that is historically and other the are of they how spring kind terms did and space when retailers you modules for what we depending if they up the of more more as in spring one then in Walmart with set Target

resets their no why of we to more in us seeing space handling a they asking bit the are spring that's little and dynamic which why how model there. reason the But are on space. are they wanted of long-term is segments have of really And perspective of for long-term model more on kind we been the used provide so Part it's investors overall handling it. just longer, that how terms our on the anchor stores people of to

how space and and grow it it? way space our So Of with growth try again, or didn't context it what see would it major now a we're we of strong be. our to growing year without what you or frame the about we think strategic in we be could growth would that should extensions then that putting that the

In terms boots major consider and I them I space wouldn't of not grocery would extensions.

it same, you would or why and how whether about marketing a right not as about level XX% go level I to percent And it takes XX% would why the go or of think guess How that's like we stay not spend. right would from to think of higher, as whether sales just kind puts it the lastly or do lower? as do it potentially to why the

for Yes, that being to talked so at the in of we're the debt XX% XX% sales effectiveness about growth really of net net major we've of marketing. looking our terms

the XX% level to of we And continue so, success. that to with XX% see

we it before, that's for comfortable level so, now do the are at. that level, just And where now, question we've that's the where we've with we it's right we put how a feel know gotten given

that conversion metrics effectiveness, and at both in reach search what value. internal Google's spend well as of other ROI looking and the the of always on of as externally terms some engagement, of And is. look We're media the earn at then we

comfortable to particularly comfortable right delta were, given so we again between level we We’re that update give for FY XXXX we can XX% we're the with where XX% guidance you. that very now and to

and reached session and We closing the end have turn to call now will answer question the remarks. over Amin I the back Tarang of for

for when with May well a Thanks everyone discuss our to outlook. full look fiscal XXXX forward we'll have you and XXXX joining as day. We speaking fiscal results you in great Thank as us. our

This concludes today's conference.

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