e.l.f. Beauty (ELF) 22 May 202020 Q4 Earnings call transcript

Good day and welcome to the e.l.f. Cosmetics Fourth Quarter and Full Year Fiscal 2020 Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Willa McManmon, Vice President of Investor Relations with e.l.f. Cosmetics. ahead. go Please

joining quarter for to e.l.f. discuss Thank fiscal us XXXX fourth and results. Beauty's you today

As a and factors to reminder, are this filings. and pandemic, and call detailed contains forward actual cause longer-term results and management's differ to the outlook including category efforts trends based are unknown subject to looking expectations those therefore results may company's relating known the are navigate COVID-XX on statements risks and SEC may that actual today's the press release in and uncertainties, differ company's materially. Important that to

presentation net In differences addition, the presentation after sales release. release session, Please the on includes company's note is today's a there comparative refer for today between We also press e.l.f. the for All stores. noted exclude measures. non-GAAP you press the to a the figures most separate GAAP a basis. dial-in non-GAAP of presented presentation QA reconciliation the comparable information the and in directly

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

Let me webcast turn to Tarang. the over

times. you, Thank good I challenging everyone. that safe and and these during afternoon you're healthy hope Willa,

year-over-year response Today, was sales investment expansion our XXXX we four to in net of for in fourth saw long sales quarters terrific fiscal the will e.l.f. our culminating COVID-XX XX% year thesis. results, talk and a our challenges quarter. XXXX in increase about term Fiscal Beauty. a We

XXXX. up X,XXX margin For last and points XX%, points basis the up since up over million were XX%. We full net to expanded gross $XXX year, sales of year basis XXX

while and in We also digital. million almost our doubling investment adjusted marketing delivered of EBITDA $XX

year was category. the strong consumption outpaced and Our all

of the color market the Of the XXXX cosmetics most up X.X% with brand grew in the share basis XX in top points. FY market we U.S., five

with Gen reflecting Piper survey relevance Z. sixth We rank amongst this to fourth year our favorite also last our year from brand teen increased Sandler's growing in teens

competitive did COVID-XX As I recharge year believe our category. entered relative imperatives. indicators by with We advantage. investing reassert I was headwinds reflect our executing and areas in to strategic brand our five an FY on XXXX performance so key these results, exceeded We and strengths important of the on to multiple our

Our of mission to make is accessible the face ever. every lip important and beauty to than best eye, more

as We our our gain world engagement storm believe to adapt equation team's to e.l.f. COVID-XX continue the digital class well ability well that and positions speed and value fundamental at us to weather share. market as

of few a me year. you Let provide the highlights

is around e.l.f. bring a we e.l.f.'s drive imperative first XXXX, generated excellence advantage Superpowers forefront and affordability, In the the kicked to demand. beauty strategic brand core charge conversation. accessibility. of centers bold campaign by off to combination Our the our emotional of to

a fresh, to and XXX% our first at prices Holy our being course to inclusive e.l.f.'s cruelty brand energetic values out pride vegan campaign and rolled Our optimistic platforms highlighting unique premium quality products key modern mass accessible Grail in deliver our unbelievable ability in social appeal. and across free, We universal way. that #elfingamazing and of have

benchmarks far community. existing to The bringing brand the e.l.f. within our accelerating exceeded campaign our results and of new efficacy consumers

Presentation] [Video

global campaign an over our out challenge, on as we X.X e.l.f. track started momentum, U.S. launched the October original became TikTok over music number TikTok X.X of which with groundbreaking a in song most became viral views viral billion this TikTok outside sensation quickly million spot the XX Spotify's global Riding and four videos. #eyeslipsface list. XX in user-generated and with million over and a hashtag generated streams music history

TikTok, to produce Lips. further over X.X we YouTube. garnered a on Republic @elfyeah million on partnered launched we Face. Fans music the desired March, a record presence destination views so Z. for Gen which with to video In Eyes. full-length amplify channel, our more,

audience. personalities, already @elfyeah engage featuring daily entertainment products and designed growing rapidly TikTok’s customized to likes. content amassed premium has X.X over million @elfyeah and delivers XX,XXX followers

impressive demand results. Our effort to brand drive delivered

week, Webby TikTok that were prestigious Awards The campaign this People's Google two content search Voice over the award #eyeslipsface the our just including best on year year won honor And X%. up Internet. trends the

Our up Instagram growth for was up our was XX% year. earned value follower XX% media and over the

[Video Presentation]

in and Bite sales including palettes Sized also viral spikes We that TikTok exfoliator exfoliant. our and existing eye gentle went saw shadow on peeling product lip

imperative roots, strategy. Our digital-first digitally major to native a step-up our second in digital. lead continue is a strategic we with True to

XXXX, powers commerce our number site FY one double to consumers cosmetics elfcosmetics.com. the digit traffic and In digital drove new ecosystem. mass we Elfcosmetics.com, e in growth

Beauty X.X to million grew Our Squad loyalty members. program

to consumers social dot-coms. and connect across unified dot-coms our in up We also over Consumption was through retailer XX%. Amazon storefront social shopping enabled retailer

and has delivering also the we app further new past we elfcosmetics.com over In incorporates The quarter, augmented Cares downloads. Last in weeks, triple access sales realms. launch are a transforming discussed our number as dot-coms. and features We're and digital wow social already our of introduced seen recently e.l.f. mobile These the few and moments, e.l.f. timely. have XX,XXX scanning Discovery bridging reality, e.l.f. receipt such physical initiatives on hubs. app of which the and our to growth retailer content digit

first delivered to providing strong of quality mass also imperative prestige results. products third Our

market position During in we brow leading primers, and core our significant gaining brushes the these in share segments. strengthened further year, hero

in Primer Poreless also drive share complexion. Camo and Our Putty Concealers our helped

primer the Putty best one Poreless $X category. is Primer face number the in the and in SKU selling the U.S. Our

hydrating share concealer and and putty We recently franchises introduction in and primer increases categories. year and the these of Poreless with extended both into Concealers with the ended the our Mattifying Camo Luminous primers

the and well year. introductions also received liquid Our Sized were first-to-mass Glitter in later Bite eyeshadows

exemplifies to We quality category. value. ability skin important continue strategically a focus care at on deliver to great prestige as Skin our care

mass strong fall. in CBD care month Sativa Our growth up first pipeline lines in this XXXX. for and skin have the Cannabis with this in line sales a FY XX% Holy fuelled launched skin care Hydration!, Supers and in We full-spectrum product

imperative and strategic retailer national productivity improve navigation Unicorn, Project is our fourth to driving initiative centers around at assortment and Our shelf.

to our while shelf. brand as for fitting presentation our has during the most designs elevate better brand position patents color productive cosmetics three and Unicorn on us products to allow Unicorn which year our Target expand Walmart. enabled items more in us our received the and display at We

Ulta at retailers consumption was beauty at strong year. the the Our and for also

expand consumer Walmart in doors. this terms innovation In of of a space plan engagement, fall strength subset e.l.f. productivity, of expansion, space Ulta our given the and to Beauty and their

international our business, In we mixed results. had

This results down with key with of X%. favor certain We overall on in have to direct beauty a weighed down our International accounts. been shifting more distributors business relationship winding with

growth EEU. We confident China brand elfcosmetics.com, the excited had a a whitespace particular resonates. major great International that remain footprint represents and Boots. in with our strong the year U.K. focus We're also on about and Superdrug our and on with expanding global that We digital

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

Our to retailer in biggest date savings We stores February million from XX XXXX. redeployed business. cost savings $XX.X digital e.l.f. initiative the of our stores of was successfully and national closing our e.l.f. to

pricing this China our in one have biggest history. Recall, In with pricing of than on tariffs our FX XX our goods. more on particularly SKUs We're approximately and was with up favorable along taken action FY the pricing execution. we pleased year took savings XXXX, that which offset also cost third we

SKUs value We the face the targeted well. approach would competitor’s likely that leading over we tariffs. SKU Our believed strongest offered also worked

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due California to in COVID-XX. set is manufacturing plant is in fill Our impact new the liquid of This July. start one up by quarter to delayed

Our new significantly provides diversification U.S. lead reducing supply us while plan further also times.

particularly to protocols team. We to first of our I restrictions lifted. beauty our were operations dedication China continue fully team COVID-XX to in using team our also lean China one of strengthen China remained the were health of and healthy. has strict techniques. Thanks companies our We and be suppliers, advantage when operational proud am the

imperatives in there other for opportunity and and brands, excited We're The strongly opportunity we is and create. further value with terrific that for extensions. our have both have We believe our acquisitions has we progress the we strategic five investments significant in brands leveraging team in an strategic progress made each. been creation equally infrastructure about our

extension three WXll acquisition Our becoming the pioneering and increasingly of conscious of ingredients clean fastest This beauty. beauty products strategically of clean ago the strategic People. brand, the months the consumers their within growing are first in was as acquisition was one segments is important

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productive positive incredibly beauty realizing platform progress where this is retail We're WXll onto any making integrated receiving national feedback initiatives. acquisition e.l.f. fully in other have than from clean We People more synergies partners growth and our the brands.

synergies for recharge we working the coming a People are we WXll months, did to brand Additionally, launch plan with e.l.f. supply chain have for and as vendors efficiencies. identified we In

look long new our In addition to a call. key discussing calendar as a to company. evolve multibrand that create term August has brand year been we brand extensions working growth to for to strategic a team to are forward XXXX acquisitions, We our our I during from single believe beauty

this consumer gives we're the advantages emerging map outline plan will in we right brand new Though the have the WXll me journey, we I road that growing of a to early fast we competitive leverage of confidence number a that People progress As scale have and in growth. integration for days later, to brands the segments. developing

response sales. Similar and seen to impact to over consumer category our in the negatively I reduce and cosmetics significantly Before we turn let call space, COVID-XX. you behavior other to COVID-XX skincare me update on companies Mandy, have our

down, the we and we're our better far, market are in than So which taking compete share. is while business faring categories

positioned better digital come our brands and than strength. proposition of given we're believe value We this out other

decisive taken response to a Our has team COVID-XX. number actions of in

we proud safety of and in and consumer team the out first companies first resilience suppliers I efforts employees already COVID-XX crisis. I our priority am mentioned is this the beauty one well-being be incredible of as they're Our the of of employees to our of operational showing fully and coming the and China navigate our community. China.

other all many our sent kits with safety hand with have of We needs. to and same U.S. disinfectant provided wipes for protocols China used gloves, employees. and sanitizers We assistance in taken the employees we

extremely an have talented and as jobs as time. many during protect possible to determined this we're We team

Lips. is caring and stop can Eyes. of our organizations community. the e.l.f. to the banks, the spread all out a donations original new take community of awareness this reached virus. service mental through of on into hashtag Face for consumer measures our food to help raise healthcare TikTok Drawing workers. health we preventive also challenge, basic Eyes. to Face public remixed announcement we Lips. to We success

videos safe, using Face XX,XXX alone. X over XX,XXX likes million created were Eyes. in close Nearly and Lips. shares to TikTok garnering

We time also we for manufactured the shipping limited team order on her are shared with every hand have partners elfcosmetics.com. sanitizer with that and a

will challenging to whether focus through on community know our I'm be this always is that discipline strong needed Our get proud and financial We together. to to our efforts of this period.

greater also in tightly managing of operating agreement amended $XX million to digital We reducing proportion back scaling us giving $XX on We're in revolver $XX net provide inventory flexibility our investments sales. receivables million expenditures. and We're in million capital cash expenses access and marketing to hand.

Union also cost same investing People are the ensure healthy European long At in savings. the future. a we in the brand after merchandising a short our that portfolio gone have mind brands across to We're we develop keeping operational and WXll term of have new and digital for to in we the continuing footprint term China. time, Similarly,

uncertain to and value to at continue to us enable moving will position the I that e.l.f. speed we're digital share. ourselves summary, believe gain to in environment and category this respond core current our outpace to retail In strength market proposition the economy.

call turn discuss to financials. the over to I'll Mandy the now

Tarang, you joining us and you, Thank this thank for afternoon.

and detail seeing share overall fiscal I'll fiscal currently in I'm in and in longer-term XXXX results, our financial what with results. Today COVID-XX the our quite our cover pleased strong actions discuss the environment XXXX QX perspective. we're taking more we're

As positive every QX. growth up wrapping quarter the in mentioned earlier, with sales Tarang positive XX% year we a net in drove

strategic XXX outpaced million top-line large The fiscal of us our up XX% adjusted in focus sales of strategic space XX% and $XXX slightly EBITDA fueled from growth significantly up ahead against imperatives growth to delivered basis the compared ago. drive deliver net our on allowed our year. our disciplined This year. was margin brands, legacy points year of and by Gross brands We prior to execution in XXXX invest imperatives. prior was behind

here. implemented our made price our tariff this gross implemented of the through particularly margin majority progression progress the did being COGS. Not but was concern we time of FX Recall advance am and on continued savings overcome a proud we cost increases last one-time of we the I only of XX% there accretive over given year benefit margin we rates. July gross the mix, favorable margin combination last tariffs

as investment digital was marketing increased basis in year XX% allow and fiscal also partially and stores in fiscal driven offset operating us programs. merchandising On XXXX. SG&A to by move XXXX. invest was behind an fiscal in Recall, increase increased a XX% was digital. investments by a XX% closing our our to more sales in funding percentage stores via which bonus in accrual This adjusted last the and to by strategic initiatives XXXX to was plan primarily from driven marketing compared not X% our rate of The in

adjusted adjusted $XX the even year. net and change depreciation in XXXX per a the of made at compared further per last in year sales we've net ago. The XXXX income or and driven million in funding EBITDA was came $X.XX higher diluted to after by count. slightly million share, income in share diluted of fiscal of $XX throughout ahead was or was XX% a Adjusted investments Fiscal $XX million net driven by year adjusted $X.XX increased share change EPS

million cash $XX XX of XXXX, WXll we Even a driven was in with enabled million fund strong by to and flow acquisition million million ago. balance repurchases. In operating The year of results. from cash that us March $XX balance $XX million these approximately increased fiscal People to $X operations our cash in a our investments share generated $XX flow cash compared

Fiscal all fiscal us and overall trends. impacted XXXX consumer was XXXX until behavior for category with COVID-XX of a momentum our lives, fantastic provided and aspects year

bit so environment. a what and we've about talk me how we're seen Let COVID the far navigating

the was the track weeks the strong April for crisis COVID-XX for up February four consumption COVID for Nielsen channel period initial our to XX. ending four in XX% Going with weeks the ending We weeks sales XX data Xnd decline four-week through one-time down of stimulus consumption XX%. period government checks. been the recently More driven X%. believe channel e.l.f. by sales recent improvement our impact track showed showed the has the May in e.l.f.

of we're dot results the softness track has and seeing and over the been fully however to all store elfcosmetics.com data map. Net consumption Outside internationally Beauty has closures retailer Also e stronger almost channels, coms. on our offset commerce benefit.

category several months the there volatility in believe Over performance. the we next will be sales in our and

on our already we volatility It too our challenging work predict the simply our the at these COVID-XX top XXXX list. COVID-XX. plans. Protecting weeks. not this the will and Tarang the year is overhang Given entire guiding with the over to response provide fiscal done outlined I of of of people principles will touch is each guidance we've few last today. the

team areas strongest protect cost many possible and as shortly. of Beauty. are other jobs will as which built looking have We we outline believe I the at we in to savings As plan

found In XXXX efforts budgets. these caring for it consumers, our most fiscal marketing out we of of our

of We to charitable the our this time. are donations to were during make we proud help unprecedented communities able

the have we additional ensure On worked financial liquidity we our flexibility. front, banks with have to

$XX approximately hand million our a on $XX additional We access an and strong revolving to position have million facility. credit in with cash liquidity on undrawn

of triggering can X. modifying declines X to through credit allows us the covenants. minimum XXXX. adjusted K be EBITDA reduce credit our April, to ratio permitted found agreement increase charge coverage weather filed In net ratio our significant in levels leverage fixed in we without of the amendment Details total This maximum agreement, on the amended our April and covenant June

planned Also Tarang inventory, $XX we mentioned, fortify capital balance capital our sheet. September. inventory planned We’ve managing are as tightly levels $X by our and to further by and our million receivables over through expenditures expenditures million reduced

P&L where with from we skewering plan million we're holding the taking to the our with long-term operation first the for the spend to we're and open in on short-term pushing decline steps been of team a while the balance expenses effort expense nonessential investing over count year. of sales better operating cutting half reducing In This spend. marketing still savings, front, growth. the head reduce On our can the $XX significant the expenses for has in match

containing this While basis, directly not organization cost environment. the year-over-year it paid major translate does to ensure on this reductions we're does a to demonstrate effort has in

anticipating In for several trends volatile, we may track you expect in face the sales we several over COVID-XX, see to sales, to what we're in adjusted year. next months. channels similar the to prior next months, decline as net SG&A versus headwinds we de-lever the summary, Given be of expect the

cutting will actively expenses we're in and year-over-year take restrictions our While motion, already not most timing shape plans to plan, of given of COVID-XX the our from QX. until operating reductions expense begin

to expect this remain We strong our declining sales environment. even liquidity in

Last we our outlook which I the net reflects strategic no expectation CAGR, mid-single-digit two shelf had three-year for or the to with first growth. Recall, to significant presented space assumes low extensions. discussed quarter, prior COVID-XX, scenarios, sales our

The net over and of significant is mid-to-high strategic sales second CAGR shelf reflects time. space scenario our extensions that integrating single-digit inclusive

In through a growth EBITDA annual of top-line cost be COGS savings SG&A. we and adjusted will both leverage cases, mix and achieved anticipate and/or

our new uncertain of brand is to our in with developing the requires once value for be normalcy. the growth anticipate we positions and proposition, growth e.l.f. model out, to algorithm and and environment that the returns we believe addition we're retail While WXll further People the brand short-term long-term the believe us push still accelerated. We the can

Tarang. to back presentation the turn I'll that, With

Mandy. you Thank

of like that believe is outstanding time challenging and strong given better up FY results we is many this value I call strength open competitors underscore to digital and our to e.l.f. would delivered positioned to navigate than XXXX equation. our the I Before questions,

is in confidence and growth investment advantages. our Our the on long-term based thesis unique

base millennial right move XX companies team consumers with XX% from that and at that We employee blue-chip academy over We're the female, XX% have want people of XX% an XX% we beauty is companies and public the of e.l.f. to and and with consumer represents one We only serve. board with diverse, hire speed. female.

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We XX,XXX from the years. shelf linear last five in feet have space expanded our XXX,XXX to

company additional opportunities geographies. significant both we space have We to house brand a single as brands. know We move in a build to brands and from how of

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to and space is Not In FY we of long-term optimistic are better potential these able to only this summary companies believe XXXX, of space we’re over. in deliver than white return confident to navigate long-term our to challenging be an the positioned in most once I have times. outstanding company. great economic model continue crisis We deal a our this to we're do

important navigating of virtually accessible plan I seeing and made our upon make upcoming further Cowen beauty to Piper am and We provide we we so the eye, you to mission Our the look executive conferences, at times than these various and more of every that grateful serve. and members face a our build is ever. where team, to color best on to partners forward consumers the our to will Blair, FY the how such are that XXXX success. advantages team William lip Jefferies

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

hear or For those dial-in line asking webcast. internationally. please so Those question-and-answer a session not who XXX-XXX-XXXX like the separate would the do at question through to XXX-XXX-XXXX a ask can questions through

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[Operator JPMorgan. from ahead. The go comes Teixeira of first Please Andrea question Instructions]

format congrats the the and visuals. results Tarang on team new the and and presentation

than Mandy's understand now happened us and Nielsen the is in If you up the my receiving are quarter-to-date, are you can shaping, But I you first space are now the if like doing seeing question relatively of help will are analysis are April inventory shipments some at the bricks-and-mortar reopening shaping data. see in you May those quarter-to-date, how were they now, if negative and what's that's levels obviously inventory levels. how appreciate they in better

clarification off was on commentary a the my - for Thank operating operation going $XX question commentary just much. their deleverage is very despite a just Is the I year, SG&A point second And to the on of efforts about that the the reduce the SG&A Mandy's still EBIT level. see believe million deleveraging. deleveraging that to we're you first that

quarter-to-date what Nielsen data, disclosed tick the going the bit, read. seen have I on things a have since up we X/XX the So on on as we

driven latest we that by government So in been XX% out X/XX that X%. were weeks the they’re spending. Nielsen, we has we stimulus read there the and and those really consumers of checks were impact down four of feel X/X And ending the down hitting

is the And do I so, go quarter-to-date, but And related again our I weeks back checks. onetime give we’re you latest anchor ending on that, government seeing. think X/X event, color Nielsen can and can’t stimulus that any we data say I to to four the shipments would consumers you we

really I'm given our the so, that we're reductions SG&A on about declines expecting of year-over-year so adjusted operating and SG&A, deleveraging sales say half the on seeing. way year spoke volatility ago we're plan, basis in year I still the of versus terms magnitude the of I that a that we're that deleverage given would year the to was versus the seeing the $XX the that am first focused million the approaching I In as this cost

question from ahead. Mohsenian Stanley. Dara go next of Please The Morgan comes

in just when a conceptual see what's category a cosmetics significant that? U.S. recently, the cosmetics trends sustained to us channels obviously you and expect of driver the Tarang can it rebounds So behind weakest U.S. in people might Is more consumers give it bit you the more their curious you a know overview mask, shelves is comfort did financial just latter more or the checks more shopping for or boost with situation? returning the the would drivers comfortable feeling of you to might assume what I the it's but mention be temporary stimulus so work the behind of that.

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in the right on say the be things to one guidance, what would now. outlook suspended of we would just are XXXX of I reasons the volatile first too question terms

behavior in checks, seen the things as Mandy significant of as starting standpoint. a major from a As seeing have ending the attention so open we close to the up. uptick, of stimulus category one to last we paying and XX we we're the to well April that's four the again really is said consumer in weeks and e.l.f. declines parts Certainly due some saw believe we're and country a what few pretty in weeks

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from comes of today question Chen next go The Oliver Please Cowen. ahead.

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our have our of to of those regiment care coordination and level communities take through many of we first for tactics talk team a from employees our U.S. went the And that foremost. health hygiene that in the We're really talks our here advantages. standpoint taking and and same really about

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really thing the we're third is And I focused digital. see on that

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that other multi-brand, and able we made investments leverage have And significant have to long infrastructure question that. brands team and the a capabilities then in believed regarding being the applied we to could be the and do on the second in we’ve

path People acquisition, as out our within to a can on the have. starting the something the WXll operationally of three growth of with all we’ve to has really I'm great map had integration to People the being that fully into months able chassis leverage e.l.f. well example that WXll take potential of we systems our lot that as pleased integrated that we with

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Tarang. Thanks

Target of becoming as experiencing the and drive is big for done momentum stores that social Walmart Project implications it's as have successful with pickup rethinking have Project lot great question last topic, had been a well a of in and where Our sounds the distancing you're age is like does with planning Unicorn, you really and/or or and curbside of curbside job there? thinking how about a you Unicorn

buy really as been at with what believe and Target us pickup have other curbside, we particularly we're well. businesses Walmart on seeing brands online for I and Yes, their in strong both pleased those

able being And is online comfort it's seen we which strong growth retailers the have. also physical I have spaces not relates of a and is retailer.com it but that continuation retailer.com seeing we've efforts pretty the I to what all think been leverage front, year, more think our a also to Amazon on the on trend so only

as multiple to in got because Unicorn. you're quarters Unicorn hear drive I come to and Unicorn, then for to phases talk And it's going about many improvements through we relate me productivity to continue

And we that they navigating customers and how what that and better are both comes ability when new to merchandising as the do well also think another even a Unicorn our about then into online be do of it visual dimension is will looking reality of the when websites stores includes our as that at we

go Jefferies. of Wissink Stephanie from comes today question ahead. Next Please

a retail response two just if I'm the you is you your a us total more question also question can special a part big We prior of big how have about business and as think about but Tarang how more as percentage contextualize some heard even help bit channels to a just you or can skin curious perhaps in own.com your like department? versus a your we skin care, of talking the maybe on advance

Sure, hi Steph.

for those some best going a and time ability sales. would more the ability of back. strategic side make more XX incremental least on seen been well it to to products our to we say category at it the of for really I really follows of where see big that model prestige skin So care and pretty what our has focus we standpoint have reflects part accessible drive from months But some consumers. the ours importantly

full of more gave indication growing we one the and use our line fast small fastest business, of spectrums a because it in So introduced bringing of it’s grow part our it I will full a of innovation less Sativa total in our that it's just it’s line still XX% - example The parts but care and of you think the business still real being our than is innovation spectrum capabilities I mainly of on that CBD of a good business bring. to having skin and pipeline continue Cannabis terms can accessible. see we

with in a would it is started they customer portion both whitespace. terms large Ulta has there, chain skin customers business full portion footprint, we is of overall I care then our small care only business And say on standpoint most of that have business. Target. a our tremendous our of up from care, skin larger an have And results our out making developed seen great still our rolling last portion The skin increasingly year. we of

me the larger the skin is portion that And online greatest care a I it’s our is, heart potential say would significantly of thing sales. what gives then its and for

from part can more bigger and we it which care that full So of skin have tells taking over business. care, were more our skin able e.l.f. it's a be to me to assortment, space retailers the allocate much time

driving opportunity as you utilization potentially not is of into just about advantages? heavily have to then we I very into in other price you. the an agent this one know back see half of in into awareness environment your your you year and leaned proposition a level that Thank you that recessionary an and as strategy And but think to addition follow value on for really more marketing your progress up press

Absolutely.

in not this one great respond we're to environment already, I in of and share. quiet core we to this think us during really build staying is proposition superpowers a our it's messages think time for opportunity our value particular so we're we're seeing those consumers

marketing done our original and on that's engagement sales to because has proportionate have those the over engagement we of been been, plans have part relative our quite been efforts number we approaches, well. are constantly fuel We have some to keep is net testing seen different quite digitally, we and responsive still efforts it’s we down as the our to have consumers weeks value of taken of in done have want and past messaging successful but that of really terms which to and learning what

have till our So that you're, really are hone it. you And think find of communicating see ways I area wait half. going continue won’t different advantage us of and to to to back you

The next Please Murphy of Erin today Piper comes question ahead. Sandler. from go

we for kind secured kind is their talked Just you bit a my of a first in you a Tarang, question what of elaborate them, we and percent of portion skin getting or those, curious plan? maybe you expecting it face just little more I'm doors, of about kind of is reset should for can preholiday are spring about when Walmart be effectively of Target kind

with particularly the it it saw in our past more us and current consumer productivity on. that be strength and that time that’s profile, strength the in space retailers pleased our really prepared till reward expanding away FYXX both we're remarks throughout on Walmart mentioned that a subsidiary time we the I of will as with our the so program front, they and doors, spring’s and are continue innovation to space the e.l.f. Ulta next be, won't fall would planograms so So

reveal see customer have their so stores. in that reasons unfortunately till neither will likes look wait to footprint to competitive it what, to what For like us you the fall

space, we related vehicles established these are last be the year we of that price key items statements with can most question really is customer customers our space part our are really to as a them highlighting the particularly in say we to Target to and some mini additional believe environment in as those there innovations be make flex within with Unicorn and taking the proved and gain still us may seeing price at previous towers to looking productive those Target white opportunity highlight across We almost merchandising us allows of of even developing plenty most really an this our that make statements. equation that value space on

look is several I But of for guess it we you feels I about definitely to they more key just to as expect is talking reason how like potentially of for the the and in curious pandemic. And starting as retailers I'm that open, of so this Walmart particularly and then at out of essential cosmetic replenishment helpful. look change? brands as retail now seeing when ask initial towards sit I kind on recognize yet are stock walk been that's right of at your lot there Target and now brands we kind the have are Okay, retailers prioritizing, are you and the replenishment, phase

sure had demand we products. for for period say in Well, such the initial as were you unprecedented the retailers essential prioritizing essentials, that particularly

to with when well it with pretty to run standpoint penetrated with to working them, always We're we positions an forward retailers. and stock history. them the supply have very our We closely confident have close we better of that fairly each comes our lean and sure have retailers in chains in that given are make do our inventory going with ability of contact pretty our

clarify And category. their the just to replenish to - starting retailer the

replenished They have always it.

point relative I the stimulus do down checks and we extremely performance while too of it think part performed I way the this to during were well category with with we to category. as has particularly relative our mentioned was

week past but been would our faster up replenishing, have buying I the more in to that seen of Consumers great catch e.l.f. so each in every for creates we've of must what because need it's we expect value equation. moves replenishment, it customers ship because this to short major over. have are the we we So and which

for And do have you. then sorry more I Mandy one

puts and share just of of some about You guys margin here, you. nice are kind the from done months? at takes think last strong a particularly us level, seeing have figure Thank XX% of acceleration gross next kind as job you year key, can a with XX what the this you

in of that a able been that course innovation, today foreign seeing our that not XXXX great progress job only is you great I mix time and what can pricing, and with to fiscal impact guidance made our margin proud We we maintain to We've the are of but of done gross as have well, improve we're can through really margin giving benefits of you. would that's and that. what one but offsetting there tell gross exchange. cost accretive And not of margin have we're and pertain tariffs the I we tell savings a

go The from of Please Rupesh comes question Oppenheimer. ahead. Parikh next

in just I people guess in want areas. terms environment, question working Tarang, of in from home you about less to get is my for you demand than more makeup for of this going how especially public a sense out think people

stay when not Well have to uptick. decline, home, and demand need wear you initial in More as we there certainly consumer periods. the to initial recently, we where seen saw the particularly category standpoint in an a the periods much a disruption did so change you behavior was at are from makeup certainly

be to we the stimulus how their and that much get sometime wanting that and were lives back little was consumers before will it due think normalcy. to of versus out know up there frankly checks to being I a whether maybe pent

results markets different where have been in retailers we're impact continue time. of get of are see our lifted, lifted We going of term data this I people of to also are monitor do the country think we that the over of have when those long back to restrictions to able to each again but restrictions pulling regions with kind are and for and

then just one guess more I question. And Great.

brands helpful. the coming like get maybe backdrop if smaller thoughts the makeup smaller just going have would any out thinking into past competitive definitely of these two how in the they are out money tractions look this, there these is less of some of backdrop As at less like years, there be made you brands, there competitive, you some

and brands competitive and change career in people consumer ago go and online a mark, and e.l.f. direct and highly the also than XX other formation of though my see you is few to years the when started I have brands used million I then a particularly out. above I anything rivalry flow tell tell almost including genesis What constantly is very of in category so you I Yes way. competitive $XXX it that brands will beauty that coming the to seen scaled increasing, haven't

top I think we focus market. growing in five on context, brands share grow but and we're continue initial we well that as out and strategic situated In the most the long as period the we're our positioned, think well the our we FY believe I brand of only even so those feel in put I top COVID-XX execute imperatives we're real to brands, our only superpowers leveraging call think we this I not year did very share I of last XXXX in

from of go Chappell comes question next SunTrust. The Bill Please ahead.

at if past de-loading. tracked I look they the that and two-three are they then not past have open doing going have questions. there whatever, usage stayed don't of used will, I and How not been less as your customers they to back do hard of when kind do few those say things has months it over how and but have are loading when fair into the up? that you going consumers and or home I know tracked up the out, pantries if cosmetics, I store, good not and as your to they're pantry of say open then sales you your have they assume amount Two a a months things that One, have visibility sales tell or

particularly will would we visibility this have core our and enough you Yes, know and the brands loyal with great that different number have to so first cosmetics do the has tell terms I don't does all has thing pantries makeup. that of in part enthusiast of many consumer of products, of though a

been seen there. see the normal home, more behavior are at we consumption term able have we sheltered believe to in return while has good people she to so because And when change short lifestyle we'll

do is right we’re with we and that on elfcosmetics.com I data seeing very pay close other where now. the have we things what and think there strong the all initiatives good we attention is really response really had

our so a to up later. right I terms conversion, traffic really and the of are overall now the elfcosmetics.com, we And new open of does site, anything even to average be the bit think a of but what help our only we're using kind values if retail and fully number dynamic, of of but of higher. The quite in the when this on will see really or quite change metrics are seeing matter all not level will something users coming our

along as do follow Georgia – are But as know I I'm is little people states as would tell? a is opening or Do getting you faster states expect guess states sales just a into people in than like. that, up bit seeing to further in you or that are it some pickup hard faster are those that you you see out back

We and lifted We sales are. better those. restrictions been the track in are where do stores have

see you comes, the would what pretty what term another at you Now a are you we're this there tell the I prepared definitely one guidance what is uptick. happens not reasons give wave can is long also restrictions that significant impact see point, but of do is to once is, lifted, there

given tell have but thinking you you based plan one on gains? to two one and Walmart less the have were you it and you Mandy any year, plans Ulta just one and about with space us what space then answer going and said with COVID follow you what be space not Got up in this, the may was shelf pre shelf gains, can shelf gains,

Yes.

- question. that I'll Bill I answer just will So

- chart we February ending we fiscal coming so four we recall, got we the we of into lot into were you that XX% momentum showed So had just the XXXX. for before were here up we weeks COVID a were if XX,

just that been and probably space gains a announced WXll the would so And at have extension higher I People the tell you shelf end second we strategic about with But of with that XXXX. we more but we so calendar we as had in lot scenario. of momentum we were feeling a that that in good so came be brand will and scenario new

The next from Weiser of go Please question ahead. comes Linda Bolton Davidson. D.A.

and does what also linear for modify the bit or you convert talk Thanks. talk you, their of stores new footage Target does come to a it same new kind to yet and format and beauty that literally converted they format, more about the about like amount have about of reorganized up talk section that? about little things, or it the bit over their the with by means they a just redone can a Can little format whether can you and all you more have

As say far it is drop for the I of XX probably as different on XXXX Target them depending format. would and about doors, we north goes planograms different

Beauty it's is have the They they don't So, their concept which wrong, a, do any get standard. think names I I expression always one have I beauty. and but think best of called Blowout

and just as those We those in of stores bigger more Blowout of a space Blowout those Beauty those to dedicated Beauty tend more we footprint they Beauty out more up convert have so in presentation continue to and those this space. we tend they roll to stores have presence amount pick beauty to elevated to We get stores have Blowout stores we and those been in with and stores. enhanced

is have Target balance a brand the is longest supplement standing not is do greatest partner or our well they towers our and beauty our only a have like they even And blow to quite but other have the store things then so if it e.l.f. up in the not I because is space where think we be that we been flex able with merchandising whether it presence

So format presence chain strong regardless of have a pretty the wide we

I a currently also, organically. going ask your of brand it M&A about of then can with and Thanks, viewpoint you because toward you're a like ahead seems launch new

mean crisis? consider frame, this opportunities would and you are time do M&A, additional the being that Thanks. does created you doing think So during also

and is e.l.f. is by that their I against, strategic executed we'll facts the have the see on short-term already priority do the and think our we continue and first imperatives at we second in to tremendous brand have other e.l.f. us the best the have. particularly focus brands evidenced we Sure,

really People People on that to So great excited time to new of in deal at the have is we pieces created exciting. that and WXll WXll acquisition, able and had we that it's at August really been space of really talk now a the you to be brand the growth that's of integrated, I'm integration the and white also hope about organically

three So have of place. going I would fully to say with potential realizing certainly full for are our team. brands all the market and dedicated short-term hands At opportunities we our term longer to in the those this this be of

That growth is can the that be benefit we created also can too. pieces that going that to platform some brands see a strong from were

more hoping it's and that valuations good current our given are both opportunities in and focus, about premature come course the but Of to there that talk I'm future. down, reasonably,

Blair. of Andersen comes question Jon from next go ahead. Please The William

a of just investments innovation, lot a categories, the the and but more business the years or is perhaps out and company, Thanks. some on a guardrails specific know size as some they if with I sheer Are horizon, that and platform, is multibrand more a ask support platform. picture, then I size in wanted building multi-brand there, the managed any talked a there to news many tail. a longer and don't I brand around or is to you years five to question, bigger some M&A marketing portfolio of brands come about three this? and committed obviously brands be to you think whatever by or a want the How about the scale kind you talking follow about? to there guardrails fewer kind or but optimally to last you look of can open you Are we of of are Tarang about are that up terms you well. on with internal efforts business there lot criteria number is there feel kind

to potential on our building Having the said clearly and point, e.l.f. main will so is Sure, maybe proving on. of have People, be team can full that other last forward talented brands, brand have Jon that, that in look as applied realized well and that both we're we with WXll so capabilities a be we incredibly brand focus. currently and to as and so out a with development my continued that set best we opportunity its

do portfolio. number in want many the we do not any have we say would brands of how I magic

disciplined of highly In we'll a to from guardrails, terms financial be standpoint. continue

great that think you financial there it's we what pursue three more our first was ago for If part did months our that strategic looking we're extension, the years we brand terms feel developing and only attractive, much as at. had perspective this that's it organically that a in strategic - about but extensions a really of and also wasn't from strategy few we of

think platforms, second point I leverage be me second criteria, the is strong. seeing for would really the both our as as well exhibit

that for is looking what number guidepost bigger any the of that so for. brands we're of or probably looking size particular you're And in value

do out. the quarters it see over you couple further what believe so us of And will flush least next

our Let me the plans tell People. WXll on me about

in Let or environment, really look to why we're at tell other brand it focus M&A that and our to we sense pursue may excited not things really we're about in but be look XXXX, me that's calendar you say particularly current this new made this want if attractive, there that's

in thanks. that of return of it may to That's What's business and some other quite strong to be what markets international, aren't one happening Last as there growth? - you haven't doing so. the like me in kind be are sounds been less quite the really may strong international was from that helpful, U.K. markets

now, longer of whitespace where this journey, major I last probably you couple have primarily year distributor on for a still at variety been of represents say, and so of a around international and comprised looked ago. Sure, years years, international world. our we than was markets us, probably different a It the footprint would two relationships

either which distributors headquarter that have is in of U.K. successful, coverage. that in have extent we the control number market, the to the we scale have and level direct quite the the with or something very wanted has of proven be to so is didn't realized to this we needed what tried that couldn’t scale we we different And that

So in direct relationship growth strong U.K. U.K. we with basically U.K., have started by the taking Superdrug brought both away the distributor the and elfcosmetics.com that had website our in-house and incredibly we Boots in seen in the

is was our pulling say rolling in what probably that's we some distributors forward, going first our So in where of where you are that's see you but go saw distributors retailers certain countries. model and the and two continue will to was, this Canada representative to international best that which this U.K. will away we from of and journey Walmart direct but of won't countries model direct markets other business and start - coverage, meeting favor that the not in be take have there us to

We our standpoint. been have e-commerce an EU particularly terms just We on call about the our of e-commerce testing focused China of I on talking forward. the call, and in mentioned from area potential as last in this we talked go Germany, brand in

profitable forward really So feel control, U.S. what direct the the Beauty as and distributor and used our that's great getting more about website, also cut it's because as really here and direct going I actually the both well have margin. strategy, as you that model we focus own in key is retailer leading the coverage, in

value particular equation You better in markets a those of have can also any

comes question Mark Astrachan go Please from of next Stifel. ahead. The

want store first online online percentage terms et on on guess what I the the in now of your website, other to et to to buy given and and it, permanent you cetera prudently going were obviously question coming online. I'm extent right retailer.com that world and sales pickup at talk cetera. what's channel sales curious if about just all in shift more a of from

share update If is on you where market can of versus online remind us your or us please? kind offline,

Mark. one take I will Yes, so that

sales for So overall XX% total our of is approximately and our that fiscal digital business XXXX. was

but seeing XX% really for that about talked retailer As XXXX. we e-commerce, percentage in we weeks, up, fiscal where has own is accelerated ramp dot-coms recent our were our

market how online you offline? share think versus about And

get partner, point to category don't area through is to is say all where but great believe Amazon. of their some and as dot-coms, have going hard with some measure even are there partners, of really we in continued capabilities doing would do make the summary a what know that they of set a retail be we us I of It's indication our cosmetics.com, We we share as well certainly we it retailer is focus data.

portion - of our it's would be think I So digital business go higher. would hope our our and business

say, the It you. else. would of I it even everything thing other engine that the commerce drives than I less is is would And part tell

digitally engagement investments XX,XXX go is you a behind has consumer lot entire model downloads. we central app already on hub it, Our and new are XXX% consumer of a our if which elfcosmetic.com particular our activities, of if made and oriented, it the engagement

I sales, hubs our it our where our content to think of how be overall it you the which or there the a gives driver the that you are the recent a e.l.f us are receipt importantly more customer indication how as hub scanning, allows of sales try-ons, not discovery all to only good e-commerce whether of company but one view more gives a loyalty makeup both program, place our in of using we going terms we're e.l.f. good care's in virtual combine data and

then guess and to of about just you're retail you're your kind already potentially with to assortment? upmarket, how come to doing ability am to new how this but lastly, bit not more talk just existing for shelf you about from it may you of have launch that you retailers complementary those being And something, space on of trying opportunity thinking upcoming, steal and is shelf, retailers commentary what servicing kind ease there where just the an to is put and existing about more brand is thunder existing example, get think therefore alluded I maybe as a about it

on highly we talked And relationships be with strong will leverage cost, and charts online. combination see complementary. the as strength our approach so our retailers, Yes, our the to particularly the I rest of about our speed. our of operationally quality best it capabilities existing Certainly here

to going complementary e.l.f. be to is it But

greater as you really to tremendous it's it a of the on forward where and the to capabilities announce, different be will that So discussions And start give than now, that, we when can different I August in hopefully most being team tremendously in points something hypothetical price my our be make clear excited likely we're that we're able our start have to with leverage category, apply a and to much talent and about. call, color excitement and able special. from lot part we comes but think right so able look something

over This like Amin for back turn to conference closing concludes I session. Tarang question-and-answer our to would remarks. the any

more you appreciate today. continue and navigates ability challenging everyone really the well I I remain market confident everyone, hope return Great, we healthy share. everyone. when I safe normal. to as things strength, as Thanks thank look we're our hopefully to times gain new overall have and well forward stay to you as updating in. these to talent and time to in a team, the our proposition, Thanks digital

The has concluded. today's now attending Thank conference for presentation. you

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