e.l.f. Beauty (ELF) 5 Aug 202021 Q1 Earnings call transcript

Good day and welcome to the e.l.f. Beauty’s First Quarter Fiscal 2021 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Melinda Fried. ahead. go Please

joining quarter for of to e.l.f. discuss Communications Thank XXXX us results. first fiscal e.l.f. Head I’m Beauty’s for you Beauty. today Melinda Corporate Fried,

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

and In the addition, there to Amin, presentation, a the today’s in today today directly release. the the Please for measures. a most the and Officer. President dial-in of Chairman also information Chief Fields, are you non-GAAP for release is presented between a Q&A reconciliation from comparable GAAP noted session, the on Officer; company’s and after Chief presentation With press the Mandy note refer management Tarang and Senior Financial basis. me presentation Vice We differences press includes non-GAAP separate Executive

Tarang. Let over me to turn webcast the

of for overall that X% Thank framework in XXXX of we’ll growth delivering so sales consecutive This afternoon, good results Melinda, net of major sixth I team staying up I’m versus headwinds strategic the beauty lifestyle quarter QX COVID-XX strong everyone. quarter e.l.f. new with million, ago. during Today, pandemic. our Keys a you, and company. sales is proud of the year safe for results, category navigating the $XX net Alicia well. talk hope and first and our creation about you’re fiscal the with brand the

five up We the $XX of top with was double EBITDA also year ago. expanded cosmetics basis We share delivered down to up in market, achieved and margin versus brands in adjusted last Of digits. the million, X% points. the this of the were XX%, color all that year in nearly X.X% we grow the XXX only category versus one points to basis of up U.S., quarter XXX volatile a gross

to executing brand strategic multiple our five competitive imperatives. in and on recharge continued areas advantage by our our investing We excel of

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first strategic brand to imperative demand. Our drive is

unbelievable the We Grill year products and e.l.f. a beauty to are quality consumers the can’t appeal. cruelty-free first-to-mass conversation. of brand number premium get initiatives last unleashed XXX% prices at relevance. greater of Campaign original a that and vegan bring our have We forefront to Holy driving that that Superpowers are superpowers with The Bowl universal deliver enough of

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videos TikTok breaking #eyeslipsface million to-date. our over audience record most highlighting billion viral campaign engagement past TikTok the views X.X of challenge, the This strength Our in hashtag billion generated rise over X views increase history quarter and X.X videos an reaching continues to and is in X.X platform. U.S. over on of million the user the

remain ecosystem. focused entire on While our we continuing leverage digital to TikTok,

minutes consumers in like entertainment deeper beloved with press. made within out footprint a orders million impressions channels brand existing campaign four food strength testing of and together We million amazing with and and XXX% social XXX views This new products. the building virtual is married unique Frontiers platforms over value our An beauty, collaboration sold all these with of by menu across consumers, The to equation high brand by across is Frontiers. limited over our collection X best-selling and engagement that activities TikTok our the at edition Pinterest, elfcosmetics.com with brand collection attracting on brand. business another engagement with new key makeup New Snapchat, Z. lifestyle, example Gen worked their on expanding YouTube, favored Chipotle, We’re prom a on New while bridal-inspired seeking our of

X.X During consumers. spending higher those the purchases XX% over than e.l.f.’s quarter, were purchasers. of beauty consumers with consumers. retail times are XX% over we’re on seeing new engaged This more even being elfcosmetics.com from that of highly purchasing Furthermore, and non-health was new nearly our with

digitally is roots, both strategic lead benefiting that our to a native in continue well digital. to as with is our step-up as first digital true strategy major Our we elfcosmetics.com imperative a retailer.coms. second

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were XXX% a in acquired year-over-year. over consumers up the New quarter

strong also in orders, experienced AOV. traffic, conversion and gains We

particular versus skincare XX% QX business, which on Our year. elfcosmetics.com is spot bright in XX% for nearly last of sales our counted our

with AOV skincare approximately $XX our cosmetics higher the only than consumers. Importantly, is consumers

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the launched also We UK. e.l.f. in app the

in footprint countries. to month, to continued other the expand with launched our ability we Last We experience ship and localized to digital EU a XX elfcosmetics.com/eu Germany globally.

are growth on especially Amazon. all pleased our seeing retailer.coms, the digital and commerce We we’re with acceleration overall

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

launches COVID-XX and that consumers product of pace innovation. embraced found our our during continued We

collections our strategic skincare, Our self-care our consumer’s and Sativa to continue for an wellness behind biggest CBD value. where desire support new focus Cannabis spectrum is incredible we results see full at collections. These and strong

seen e.l.f Our X%. track Supers XX% skincare XX% quarter the our consumption and was was up versus also and More channel XXX%. Collection! up channels in demand. a consumption was recently, elfcosmetics.com powered niacinamide for was a the ingredient, surge trending down track over super by up over that category consumption

all pencils to fiscal segments. We skincare the expected primers, of and strength in maintaining in brow number help our the reinforce position balance our our have three launches one for We additional propel brushes slated momentum. year

market share the our successful points points increases respectively. now drive franchise segment share primer, to and extension XX mass of of continue poreless putty poreless XX our Concealer has all primers. ranking three with gains in The and also been primers XX with in We putty leading franchises Camo particularly top

palette. XXX% with We of collaborations partnered row; sets The also shadow in and sold We’re values of Jkissa lip, for highly vegan, time piece limited purpose-driven out less Jkissa and reinforces pleased our featuring brush five collections. and XX our with with a in eyeshadow how eye, a e.l.f. on time our shared year every pigmented the and product face than pallet the second results days. cruelty-free paw. this eye stands website

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we the price tariffs. the also XX% in last of increase to We’re took the benefits July lapping response

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Thank you, current and the we’re seeing Tarang, us joining QX I’ll and provide on our strategic perspective environment financial operating cover economic how discuss thank for our afternoon. you results, what all this long-term connect model. Today, to in extensions our

from was of Ulta to of our we our million, impact and partially pleased quite that to results. performance and X% offset year by track growth sales closures consumers’ We $XX delivered quarter. store growth e-commerce driven are customers persisted accelerated the ago. with see further We international up QX once was most This channel mainly wallets. net by started stimulus

last performance with our our outpaced up Gross the XX Our points. margin. XXX gross weeks, behind compared in the was of basis prior share elfcosmetics.com large brands legacy points category our nearly was driver primary XX% accelerated the and versus market ending space expanded the to outperformance up margin XXX basis X/XX year. in

of mix online, sales margin from shifting and site consumer benefited year versus gross our total the shift. company that represented a ago, mix With more our

elfcosmetics.com, drive accretive the stronger site. mix, on consumers extent, overall pre-COVID-XX the we shift in e-commerce. Given promotional behavior away price shopping lifted the gross were margin back we in to and margin increases less and sales FX acceleration to quarter. of gross our for overall momentum, margin be also into benefit saw the able e-commerce the and from

and increased of a basis to related related e-commerce headcount by the margin, primarily dollar given volume sales, to as the last basis. percentage marketing basis, and gross capabilities, quarter, percentage performance will ended SG&A operational XX% half roll quarter of year, driven strong XX% a in sales and XX% on net sales in of benefit annualizing investment out costs investment compared XX% marketing and a on our We we digital to approximately XX%. back seeing to back higher building XXX adjusted target. our marketing, was up as was increased the innovation behind expect an digital in the the points. are digital we by below

to fiscal a XX% at of target year in was levels over margin or with of of up per to share $X.XX cash We million diluted expect $XX EBITDA $X.XX to percentage XX% operations. the on per higher XX% spend a range million, from a sales generated versus as adjusted year $X we $XX within full-year basis. of QX XX, sales. of three $X prior the X% as months million the marketing net income balance was diluted net year ago. for adjusted June we million ended flow share, or stay compared

by a and balance balance of million outstanding year expenditures combination Liquidity year million had to access quarter. We with our prior in cash-on-hand, compared $XXX cash versus a We credit repaid $X remains $XX million. QX credit on the our cash also ended the of strong $XX with million at facility sitting ago. capital reduced to $XX we revolving our million this revolving and facility over

near-term not remained The to in anchor suspended. delivered pandemic, From the an fortifying long-term on XXXX growth. variables fiscal to expect imperatives strategic strong, on we multiple and the expectations a external our supporting our five We was guidance outlook strategic we cash standpoint, investing play. to quarter balance with fuel in sheet are QX extensions behind but full-year COVID-XX performance cautious our priorities remain during

overall volatile. remain expect economic quite We environment the to

remain end COVID-XX consumer our behavior the year. year, through calendar impacted least not of also the full fiscal expect by We to if at

the price dollars to half to data we up we the double-digit implemented as While the round expect and back in drives cycled track channel stimulus growth a in as see quarter, experienced summer. off last the first leveling we of of we increase,

data, of as COVID-XX cases Additionally, our volatility especially recent in sales a deal the surge we are across seeing great U.S.

our track where impact results take still steps also the this to growth. on channel while we reduce, we to long-term to expect can front, the in continue expense We in investing near-term.

did progress in stated QX. expect quarter, savings As but some not expected last we in QX,

XX% Given on the expect current basis. shift the associated the start do material QX, with improvement since cost in plan and elfcosmetics.com see sales operational our sales savings toward the costs year-over-year the digital for to to XX% marketing in to keep and year, a not range of increased we

margin expect if offset to shift with margins We stronger gross in remains net the have partially e-commerce within SG&A.

certain costs on development SG&A have to costs the costs include of WXLL extensions strategic as related balance and will we We year. our treat integration to People Examples for to adjustments on expect the Superwoman. Project also that

investment priorities, cash We as this working cash $X of across capital and $X expect retailer our brands in our in fiscal CapEx these XXXX to prepare million growth. distribution. leveraging million for invest long-term aligns to we with existing

both leverages WXLL Lastly, beauty. Alicia’s Beauty complementary I distinctive portfolio, that structure our Project brand fee express a aligned cost both we milestone-based in inclusive, interests is as the to to leverage about how and portfolio place We to us reflects and have equity. this we up. believe People our allows cash standpoint, and I with it excited and and From scale adding structure royalty to e.l.f. a are this Superwoman. cannot accessible, financial am with commitment plus deep brand cruelty-free our our

to outpace addition e.l.f. economic growth. the of we And presentation enable the that economic to once our model be and Superwoman, long-term to our we that, retail the the to the believe believe continue back short-term Project us environment brand to the While achieved. long-term and digital People higher continue be and and core expect can value to category normalcy. we With uncertain, proposition Tarang. I’ll believe volatile returns with our will end that turn quite WXLL We strength model position the for in of

time e.l.f. exciting is This Beauty. indeed Mandy. for Thanks, an

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employee XX% the serve. at we an the with have representing right We team that XX% XX% female, millennial diverse consumers base and

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difficult remain the these questions. the are may call this With to company. potential of we optimistic that in operator, open you to long-term While times,

webcast. For to please through do question-and-answer dial-in can screen. those questions few ask the questions up line session those a the minutes question, through who’d asking pause dial-in for Those a a like noted the so to separate queue seeking We’ll ask line. hear this not to on in

Instructions] our will Piper first And [Operator ahead. Sandler. with go come Murphy Erin Please from question

that or channel up also closed it’s retailer the And what opened replenishment that since see a thought Good you is guys did you afternoon My saw of question math the you is strong for of what progression trends Great. quarter, could from to around that Thanks. speak a part was quarter. congrats and quarter. start first Maybe, you then if the really in first perspective. mid-quarter? to that specifically on

Yes.

what hi how the Erin. was we you? terms volatile a quite So, quarter, are in saw it of quarter. within So,

saw growth in half believe then the back quarter, recall, when we the standpoint, any So a were by our was have closed strong say that acceleration for in And were and unemployment point, channels. not their did we your about we benefit stimulus and receiving. of trends growth I e-commerce if were with our stores that were Ulta. extra an a you that of track there Ulta from most April, really would in quarter, towards we to driven XX% but the so down sales the we saw QX. primarily an that consumers

around if I opportunity the Will and about then of And question referenced the as brand, that you it think you my Tarang, working of skin Superwoman, you’re second curious you. talked I Okay. there? then Project anchors you How well. – of thinking you’ve are is given cosmetics in so wellness, be guess about about prestige. this a channel entry-level I’m really with you addition you new and do kind to some and the if thinking more brand? retailers lifestyle thank pricing

Erin. Hi,

we thrilled say keys brand lifestyle substance, we What someone than beauty inclusivity, working just brand. has to Alicia that stand on lifestyle about a this alone. new by Alicia meaningful We’re with beauty things real mean is values is on of for. is beauty, product brand who much more wellness, of many the core

as of including revealing line a we online. first our We’ll will amount our engagement digital terms a November channel up the time be brand, through digitally of and we partnerships content focus by do ourselves, will question share So, retail and be native more first. want can on to on brand that call. There’s mix, your the brand of that the tremendous in probably advice name,

you, both. Great. Thank

welcome. You’re

next Please will from Andrea Our question go Teixeira come JPMorgan. with ahead.

good Hey, of all, afternoon congratulations partnership the and first Alicia. with on

results You would ambassador escalation find first quarter impressive. I’ll were and send say I it; your more cannot

anniversarying And before. all, of elevated off. price you’ve last investments so over skews when and increase gross much that obviously, anniversarying how – concrete So, understand be to I to gross making I takes really my margin. just in the you’re the your that than but impact elevated was that comment and can be anniversarying thinking make puts messaging we – saw I’m to thinking and take an kind of this year’s I margin, impacted think when also see you’re I how quarter this think should me, have and the from of plus we just SG&A, that quarters, those we understand that the would you’re first wanted less math, numbers on if this I correct the and now. the their sure of to impact of –

to good you are and improvement it’s or the are being going last in quarter. we that prior level. So, to implying to see, still an said, going you’re see be flattish, but like margins – you. improvement on saw margins Thank an EBITDA in

Yes.

Okay. with start top. will the Hi, Andrea. I

So, your on gross question margin.

we was a of because So, benefit quarter, shift this in our the gross e-commerce. margin picked up

to patterns, to will in-store shopping And points in about probably now, that benefit there XXX a basis gross so back margin saw we sequential that basis. roll way the quarter. benefit the normal was extent that shifts the on consumer that

implemented pricing, we In is year. last of terms the pricing QX when

that’s that of in XXX impact that our was we So innovation, anniversarying somewhere gross of standpoint. SG&A, our and points pricing infrastructure and overall we’ll the digital to to basis made we then margin benefit basis And in when for range start XXX on points some our behind marketing and capabilities. cycle investments are the of

basis, margin, quarter, we incremental also as as I that are is on the incremental line. drivers talked dollar on And about and into investment well and that So the then shift, costs marketing you the got one see e-commerce of SG&A digital. a but SG&A incremental there’s higher gross the of costs why come benefit the in also, as

picked of have guidance. you on terms SG&A the this those and So, in up in outlook, I suspended margins mean, we EBITDA in and quarter adjusted

of terms we this as had direction about XX% you can of the that, I balance really think into we for only year. XX% ton expectations, in give range that marketing investment, quarter want but a I to that certainly, say So, we of up to get that the on XX% can’t

Thank you That’s much. helpful. very

Jefferies. ahead. Wissink question next from Steph go with will come Please Our

Good Also, strong quarter. from afternoon, you. Thank on us a everyone. congratulations

you. Thank

Tarang, games. space question on just with a your I you comments want on to start

You assigned those games to skincare.

agenda you a We’ll if also with and curious think partnership at maybe, I’m six some your So, XX those skin of Alicia. and course bit and about talk little can agenda include referenced next on also I you’ve the the broadly but just about skincare Walmart months. skincare, talk your specifically with space over the with games,

the well an for importance and and trends. both couple continue our last has been innovation as strategic to Steph. from seen Sure. more skincare, Hi, into what is, I’d tell as momentum you standpoint, we’ve years, us a in skincare what we to pour growth

in remarks, of elfcosmetics.com percentage business. business our but is XX% our a skincare talked total I as prepared our of represents So, X%,

to quite the target, So, we we room we get retail where bit footprints space. on skincare. larger of a skincare, as is on more have customer grow skincare particularly we in developed right now see do have most

items. Walmart up as including gives to more other fall, the pick this of Ulta opportunity us our space Beauty So, retailers, more get we skincare and it than

and through to our struggles we to spectrum line, the continue then Alicia’s as personal as brand quarter what lifestyle she to to Alicia have in and new important journey strength full skincare, overall footprint we – Sativa terms innovation resonating CBD keys. all lot our say beauty recent so as was there. for definitely greater skincare a Supers a And the get bigger Cannabis line, our with our able delivered And that beauty. line, on has in CBD really see we’re is pipeline on And future. of results the born well a and skincare great of in

that business. tell innovation as have well skincare, of on thing People. who’s than line, initially What our capabilities certainly, we just on And team on and in also WXLL board-certified a dermatologist, some Snyder, for you in of WXLL Dr. I’ll the our this the of area the product, skincare. we’re Alicia on the Renee multi-year as has aided focus development one products doing but what developed as cofounders a keys a People, so of multi-category, that, actually pipeline on increase to continue we’ve will And line much is more last that

to I to and Okay. new on mentioned insights any elf.com, you follow-up XX% customers just on of customer – one finding your file? new do And could your cohort new customers I new unique were that file. from purchases you’re those think XX% on

Yes.

that We’re as is us to we of trade some consumers really down pleased a combination consumers well to have initial see from new mass the on prestige. view coming the The brands side, as our legacy coming from to level of brand.

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many how depend that are will are of consumers able pleased but coming how of franchise. into a really new So, many by we we’re lot them retain, the to

Thank you.

Our Davidson. Linda Weiser D.A. with will next ahead. question come from go please

could on And about Chinese UK, for any talk and is there of wondering I’m the us penetrating aspirations retailers you you have plan your beauty specifically also, Hi. some update there. long-term Yes. if what your international Thanks. market? business the in just and distribution Europe

Hi Linda.

I to the similar take international, So, on here for question the that in me the story saw business, let U.S. would a we say what quarter international

presence those business at international closed was quarter UK with Superdrug our Boots our stores were online in the most you as well. closed, if international So, were the strong of very think about retailers and the

but So, was we saw it growth in overall by international, e-commerce. driven

China, that. business I white an international terms to that of in still about in pass more would it space is say and speak Tarang And piece I’m definitely our tremendous remains market. of important so to And going to

Sure.

We our have high in for hopes as well. business China

having China some XXX% different being business and for marketplaces in JD. really really in China us where now through a cruelty-free online, value is in guaranteed regulatory find to we right important brand the standpoint is key our status. manufactured e-commerce – scheme, like through we Our country, a Tmall of our What go ability as is are

days but to only there, in world. foreseeable aspirations change, have the the market that’s for in very we’ll be I’d so penetration much largest area of focus. be in And our terms of the least happens but it’s early still the e-commerce. the till we’re e-commerce it key regulations on will a future And say at

you. Thank

go from with of come will all question Oliver next Cowen. ahead. Chen Our Please

the on opportunity distribution keys, on go looks congrats mix the the the to at your – and how that over broadly, there where thoughts continue we nice as as on as are grow as that implications well that thanks for regarding skincare like brand. also time? your details well more would Superwoman what AUR presence relative thinking I of as AUR points you’re a new model to are to mix Alicia Project and/or that to brand, might margin and e.l.f. this of relative For about e.l.f. and opportunity forward, going long-term

Sure. Hi, Oliver.

things not person to she’s with many and she’s celebrity, attracted thrilled thinks greater broader of much of that the work only as beauty, not just us others. and than a much she’s the a keys substance. her to So, longstanding was Alicia Alicia fact we one But of more; much, she depth real are that vision mission, and

real Now, winner a bestselling the myself. as producer has artist, XX-time Grammy memoir now, times best Award author even of she her substance. New with York more

part And of for this vision is really so big with a developing the her work long-term brand. a

a earlier, we pipeline, mentioned So, other well as mapped do. that already I as things out as we’ve product multi-year can

consumers value be excited. space, would the how And so level exciting on to we’re bringing then really now terms of the brand, of innovation, things about on equation. it see of I e.l.f., new of And in is e.l.f., that to company white space deal relates our great really a say right overall whether one continue to the our we

terms buy have order standpoint heard standpoint. mix, Mandy while higher value elf a shared. that an an lifestyle stronger who much company, higher definitely it that a still for the average only keys. and with clear skincare as from to end as cosmetics. buy previously once of add then portfolio a $XX such than pioneer confidence elfcosmetics.com model of as beauty, We right this greater economic Alicia mix WXLL clean hitting return consumers higher that you’ve have a – well People think brand a long-term from on in have of And consumers, value normalcy that. does things that a You creates extraordinary beauty clean we skincare us price in to

that happens would proportion expect overall the the the skincare to over as we business of company increases. of the AURs time, So, increase

Okay.

thank thinking roadmap ingredients technology, to and from develop in about ingredient R&D proprietary Lastly, on innovation perspective. an mind ahead. your specific differentiating you ingredients what’s regarding innovation internally yourself of can on you terms and you’re or and

a of consumers products. increasingly the Well, of been we’ve are in their standpoint on long that ingredients from ingredients conscious focused in are

did ingredient parabens, niacinamide and on formulated you phthalates, ago, that focus away CBD real particularly while heard see from full our last to we is ingredients, consumers not from very products skincare other Sativa, strong definitely it, has our are products. want a What in ingredients Cannabis spectrum lines, quarter their a Supers So, even focus. Collection!, in in this a wellness, have

in see apply it on what great focus clean on products We only brand. highest this the but keys, also even in and new from take ingredients that People our our but create to e.l.f., ability WXLL we one capability not in bringing with capabilities stronger that the gives the us feel brand company, regard. think that that powered, beauty not area, I in beauty the has do lifestyle beauty plant of clean our really only really labels, I into lessons standards Alicia to it are greater about

regards. Thank you. Best

Morgan Stanley. Please Dara Our will ahead. from next with Mohsenian come question go

Hey, good afternoon guys.

Good afternoon.

Hi, Dara.

in share competitors decline. your as calendar quarter, the were question obviously strong Can and on building to very the you share earlier in opportunity lot XXXX larger out And substantial brick-and-mortar discuss space we your at pretty the of fall? a some games color shelf look for skincare, on this saw gains

just wondering the space subject, And changes that still shelves making the drives I’m were COVID. shelf to changes this about also expect the a realistic pretty of covert space a apprehensive to result Thanks. in So, their going so. Is color performance retailers the secondly, from fall? changes delayed shelf in opportunity recent this or this on next spring forward if step environment? then more over of it as where Are change in same year

have let’s include Ulta, to color in we’re going pick Dara, it that as comes to both fact, the space shelf and games And well we So Walmart as in at when say, potential great games up skincare. color.

we’ve in put So to has expand have decided a fall the and already the set. their will for skincare target housing done space their space skincare approach we well we’ll doors. space up e.l.f. beauty of pick within skincare the Also and us. preferred expanding we’ll are our follow in skincare in as That’s at set. approach there the similar their subset additional with be a they sets in very, and At Walmart, really has taken that on sets that e.l.f. our shelf

combination that So, location our both where sets, current picking as good about in in we’ll up can a feel our more games in well for in that. put we both space color places, and secondary the cosmetic track isles terms skincare we of still as plans, had. on e.l.f. we’re we items on see in skincare the more

All games. hero resets Concealer. of track of have we’re see visual had more on merchandising, later were spring retailers to comes a our it of those. and do Camo greater when our spring resets Unicorn, definitely all Primer well much not like our items to up – phase for games focus come have much our Yes. this actually have Those or on were particularly Putty this, fall bit how where this both that seeing future certainly Ulta environment, executed games Walmart we are our hopeful phase at confirmation we usually room which for any I on and and we’ll executed space although a go. we X back but unicorn of in Project also and should Those Poreless X key and and benefits beauty, the are execution of space space on

forward customers helpful. from Thanks. repeat to that rates more customers? on trying just And opportunity new you six that talk the to sort that Do of you maybe, expected changed with months, push about a Can more you the the some to last think pre-COVID few and would then conversations there ago given would in customer how in than the performance you’ve you and incremental a seen new are also Okay. retailers? as you question early terms different just on has have up. picked those months be going of hold of bit you that’s

changed on sixth consecutive strengthen Yes. This Well, as continued much where sales I our we’ve conversation the to quarter, the is as don’t net I had believe growth. it’s case. as would space say – as opportunity, the well

those is innovation our competitors increase to see continues retailers they at. really and than all space. productivity argue with we’re Our more most key that consumer bigger pipeline profile, our the for of and better

picking But well think sets. when I It And think strategies for overall they to able shelf space changes I comes by well-made focus to that say Squad retailers’ case retail so our of Program. customers then our are primary Beauty in that been our the I’d well-received all Loyalty and through the we’ve conversation and is is their own has really to been established. make terms up, particularly, customers. almost new is And of there, online

ability As focus and will their X over of in points I they to aid last initiatives program loyalty products, an e.l.f. consumers can receipts scanning, us someone to journey. area of XXX% e.l.f. versus we that that for that million our up is we’ve be where as convert loyalty customers our now year, buy previously those talked integrate new get members, and mentioned, continue as loyal to help where increased regardless and will app to e.l.f. about, in such

really is them program more those our over consumers converting time. new to focus loyalty So, over retaining and of our

Great. Thanks.

question next Truist Please of come Securities. Our Bill go from will ahead. Chappell

Hey, thanks. afternoon. Good

afternoon. Good

Bill. Hi,

maybe advertising really it’s the the obviously has Project brand, where of make as being the new advertising, back like celebrity a was with e.l.f. of financially a presence going trying of over Or Superwoman, I XX% because anybody also of mean, cons and just you to that splash? do XX% but to of big surely understand, the type marketing, Tarang, and slowly years? number it mean e.l.f. take as endorsement marketing, and you’re know, out look brand to a kind brand launch does that kind you a beyond Hey thought up have comes brand just everything that to going a well it celebrity versus kind building and pros a but to it been, of to process, to of different

Yes.

attracted is substance consistent is, see real you’re those celebrity. really approach think more lifestyle models with one some building And all, years. is maybe more – other do brand for Alicia of that has brand our can a This than to first celebrity with a the than that e.l.f. brands. familiar I of She Bill, of beauty the of she’s long-term really long-term. a who the we us for things So Keys many with and someone

the so is which first that remains And very we much approach digital take, intact.

which to Our approach is, date. we’re later then able will entering a be retailers announce at

and e.l.f. the in of building think this long-term. doing see for a deal I way interest you’ll brand the great things

of In marketing support. terms of specific the levels

want lifestyle haven’t about it the overall given tell would approach I as not big the trying then that next you and We bang brand nurture haven’t to you What to to approach the and talked we much is on is the our get we’re is sales for the once move where new definitely build necessarily size thing. there. This relative something we in long-term. of yet to

is millions build. And is to we has And the one and much this This we’re forget then so just reflect retailer and hand content Alicia relationships I the incredible brand. not with and online and who further the that think, plans I’ve want and dollars launch talked previously in with terms an about, Keys, magnify all amplify something loyal tens then where with spend help of planning nurturing following. taking very to about to definitely of brand in leading hand selective of

to is – in, mean, will out by spring, phase the a longer just resets ready I calendar a in it And this in drag than done or cadence, the little all year out it so have you’re for that? it then on brand, shelf it. will, you follow-up will of that placement, Got need the planogram bit it terms typical,

Yes.

would a haven’t We retail what probably position on some of we’ll say is, specific to better We lead later. a call. specific then we next and I bit in but talk penetration you’ll be would our plans see online timing, given the those haven’t

areas brands, ub then go see, road? down this one are multi-brand that Do now one often you the you you see there. said, PEOPLE enough? and just last and And it. do Got having other could there more you is WXLL Or

is go. our strategy team overall framework applying have we the or mean, in can would excitement that the on are then acquisitions, emerging with we to don’t places lifestyle that something of other capabilities given and see obviously definitely I is open the plans other taking brand. the hands our infrastructure Alicia you three and the what them We strategic brand brands, do can WXLL other to and we as we’ve tuck-in the strategic peek on I their future Keys. But have part time have but PEOPLE, framework fast-growing for on for we tremendous we full the leveraging as brand capabilities in our create. team the we focus plans beauty and the including see particularly our brands as built. And with we say have the well that sneak e.l.f. space, being recharge on that, We gave overall white any it could these and immediate in for brands. we

color. the much so for Perfect. Thanks

Blair. Please Andersen with William Jon from come ahead. will question next go Our

and for afternoon, everybody, Good thank you questions. the

that it do respect as forward? Just largely, other you to two now for of was see are during me. additional there complete ones of spring. Unicorn expect you quick quarters? we that Can efforts Tarang, that think, Project kind should accomplished refocus about, areas Or going you three I in and coming Unicorn mission phase mentioned this wrapped view to with on talk effort

Hi, think really phases. And at about at our each you’re the the hear like of that And be phase really shelf Unicorn don’t Project Project productivity. increase it John, ever Unicorn, stop you if work in done. seeing we’re were presentation our ever do elevate think to successive in We Unicorn. objectives retail to don’t going what talking and settings has I they me multiple of look as will I

of Unicorn to bring and continuing presentation So, the visual merchandising to retailer had our our couple the we able next phases spring greater shelves continue of to this will sets. of journey be that elevate

which much shelves them some our if elevate first three, merchandising. have at you and on visual The looked such poreless that core as Concealers, focused easier last mentioned, this year the additional year items, on primer putty Camo to I the We hero as continue see phase just and find of versus navigate we so that opportunities to is real strength. areas really

Unicorn next evolution this there. space you’ll Walmart that we’ll So Beauty, future additional both pick at hoping continue we’re in the in and of year. And to up the particularly years, fall Ulta see

look of point, year, on one like what So, mean, the next Unicorn, and XXXX, clear terms in of and if through I look some grow. maybe of these calendar productivity much in quite it looks think like turn to at room and phases which we’ll a the you, I successive change at navigate, consumers to of the brand pictures webcasts what I is the terms greater further of show has elevation version else the it’s to for and step led we we how shelf. of see easier of still much in in

Excellent.

update been be facility mentioned need delays think liquid new fill facility in an there due will your in the you there? that near-term, are any capacity You deal and prepared on delayed ready have production comments you the that COVID. constraints given briefly with had Do the that to you to when

of fill in to unfortunately a liquid our the victim been COVID-XX. has related Southern so California facility Yes, shutdowns

not and So, do been installation we’ve engineering to necessary. work the able

We’re still particular under for that facility. lockdown

year, on facility. not I be that timing say, So, later would I this an it’d do hopefully. of have the update

think normal to hoping our we all when COVID-XX to for we’re but somewhat from to are be normalcy, resolution that on back think to I path and standpoint. that will I subject returning

our gives further are reduces program. interested which In innovation fill terms the diversification is on the objectives think times, lead still thing facility facility, and of that say, supply capacity, we’re I’d us also as particularly of robustness much we other very which liquid the actually of one significantly of in, intact,

am companies when operations team So, team, – team, open particularly were on our were one those of hopes so think are to the lifted. beauty able Meanwhile, first we to COVID in able achieve be our being proud We have after operational where we we’ll up of to high objectives. restrictions our I it have China. I fully

a within meaningful any disruptions I needs. future. during And manufacturing, our flying overall, chain deliver. have in for speed team continue think, strength will that about capacity five and And to supply through seen plenty COVID-XX lean with be from then planning And capacity deliver as incumbent colors. lot our a business, volatile We’ve of we we supply of test and were the feel that so and at full and to capacity we’re of our cost, that savings, really I drive far time. combination pandemic of this not able the of to on lot our really a we the meet coming ideas we continues our the standpoint, weeks. And but think, great really to see the quality volatility being to put

brand. life there PEOPLE, in, Great. beauty prestige so beauty VERIFIED, you’ve adding one style credentials lifestyle EWG – clean price I pretty WXLL real actually, like squeeze to if more now quickly at gone brand, a I could a now one rich from a value line e.l.f. points, to brand, having

from, past. have the marketing, brands you management, to you increases order more in brand need managing changes steward, the three single So, brands these operational focus – to and going then that to standpoint, you’ve production effectively a how I make kind you of had are there standpoint of opposed organizational business, or innovation made aspects planning, from an the to the guess, like of to have one need complexity in internally three allocate people as some inventory resources

two Sure, tell things there. Jon. you I’ll

think of I and we’ve First XXX XXX almost of had foremost, now. them employees, out our we’ve selected

beauty pick and chip environments. blue And from tend so consumer to CP we

is, often in brands. that more the team So has time on much categories multi-brand involve comes experience. executive the multiple Everyone many of same with managed team brands the at

capabilities, from think manage portfolio SGNA ability of Mandy second are talk So, levels. And to we the I a really you have good about a the heard thing is then brands. our

of some building that SG&A And went vision into multi-brand really house. of a this

well of think spread areas brands. have be some by of multiple I brand of these as of you us resources as that other that you mix digital of brands one If functions, matter as brands confidence it lot company manage with a dedicated doesn’t the these marketing, give manage who against innovation, resource can in portfolio we have that able people to back-office can that added three or greater the to a each brands well. of So,

lived to additional that, And almost before also so really I feel we of want but good excellence why reasons three for having one environment, moving sure our multi-brand XX to certainly a ability the these years execute with that’s with to we brands. on make do

a Thanks so on strong much. And congratulations quarter.

Thank you.

go ahead. next come question from Rupesh Parikh Please will Oppenheimer. with Our

taking for my Thanks afternoon. Good question.

back the the you’ve across terms some any color just the in recently, about that e-commerce, and in see all channels you you retail some of infections provide around more it more going of just more there. whether to seen or So impact, categories, commentary, spikes volatility just more can the thoughts

Yes. Hi, Rupesh.

basis. on the another a I in data were would I to track we have the channel. on say started we uncertainty stimulus, surgeon that that released softening COVID see the phase the just cases in a around X% range of say, like was with the weekly So, a, Tuesday, and would

of volatility have I the We and have think COVID there’s more economy. broader still there’s still we then seen uncertainty be a in there environment. until a to normal So, out of still lot

take to here forward. we’re week week think And have so I going look just as we by to it

sneak question. I’ll in then And Great. one more

your promotional I’m maybe, the the more curious them given And on environment, just as background? year now. the at support guess later what I seeing to see look need some just of customers, you’re makeup right you the retail in then So, difficult do you

Yes.

be gave the margin of all less e-commerce, our the first that into on seeing even mentioned able because on our So, were start channel. I’ll more benefit, promotional actually gross an us I we were which natural with we of call of to traffic e-commerce. that a the

promotional. say to I So we’re us. retailer a that not would standpoint, was a benefit from

game. we play don’t So, really that

any feel channel. And in so don’t be more – we know we that pressure any promotional to

which goes extraordinary that’s And is provide qualities, player served well. role or that be to this and a and our promotionally a as values extraordinary is not prestige day every mission lot And really, that’s value yes, down driven model, of player. with high continuing

Yes.

Thank great. you. Okay,

you. Thank

Our from Astrachan with go next ahead. Stifel. come question will Mark Please

Thanks receptivity kind shelf maybe incrementality to just wanted afternoon that, general just their gains everyone. get I the a you’ve what share Walmart the of and given most from out lot some retail is and there time Ulta beyond had for the regarding of gains larger retailers and size up that shelf be directional underperformance where of to good and lined way. about that space two of to for related not gains those ask for of them sustained some own brands seem able space quite Ulta of to or obviously now fall,

So in about how broader strokes opportunity helpful. does think that? would and, more sort that create any be time for yield to think I of about

Yes.

So both us and Walmart Mark, gain. Beauty Ulta space not ship do want specifics on our give to

average and that’s increase most other Target for as I on be think some space trends we room plenty Again, as once from what have given that we at able fall will in our customers. provide the an later e.l.f. particularly a that has the visibility footprint customers, and twice don’t established of customer get already hopefully would beyond set retailers those greater counts receptivity that sense And retail get on those a on our we gains almost the shelf the picking November, those. So of a all space, I we’ve you’ll, have having least space There’s an you’ll increasing subset e.l.f., in have able of both probably store yet to big see and and of of to standpoint. until set. until I in we’re customers conversations looks bit XXXX to people It’s space, better any regard space wait not of with year to on soon shirt and have say to in can on what talk be innovation up like confirmations. enough.

of related a to that starts question less sort Maybe helpful. come That’s it back related will related. Okay.

some maybe as in improve, has begins potentially under that So shelf are is category level obviously simple previous is on of allocations obviously still but, that bit brand how circumstances on And thoughts beauty go going would they on that opportunistic applicable? incremental the talk we’re in particular uncertainty, are before about it’s performance a where COVID touched space generally to to on general, a kind weak, it away about basis forward remaining had question back improve and better. be of or is the to makeup or thinking just skincare then, performing then what how retailers you

Sure.

the I’d So, the is on makeup say factor category.

I outlined as you a COVID-XX. think first foremost, to return and is post normalcy

the We’ve April I is down our way in our the going which the that going even seen one data, seen the biggest be behavior, volatility restrictions we’ve given in businesses, place drivers. of to in in fears the COVID-XX and think to that’s track settings. on were and channel own retail

of catalysts one resumption and key So, of think the do normalcy will I trends makeup. some seeing be of better

players, to other they’re for the I good the some to return thing hopeful the more legacy category is, within being be launching of as more do able think category products, that I’m able to larger the can overall. really

overall I from consumer innovation and good an larger engagement category. is having the long players of some do for believed also standpoint that the So, better have

of no increasing. category continue declining the is, share, environment what matter We’re confident to or ability whether is gain to our the

which say category then, core relates trends, I for second the would I the at is a consumers. to is, – if main so both And that those this would term look I of do piece. third, be And longer

And on are speaking so category those within shift consumers. a is see you’ll the most what segments to that

results CBD line. those So, seen on the good core of makeup. blurring the number whether We’ve collection, Supers, wellness it Sativa, whether be Cannabis our of really be it between the and lines makeup products, a or skincare

were feel share I product of our gaining putty to not a One of reasons whether is well have complexion. great. primer you products. on the only makeup our focus we’re wearing and Poreless great, need as outlook core is as why Concealers many or to similar believe, look the other you have,

some to think those the consumers. regardless subcategories see are as you market will more they or I in continue within shifts terms of of see, category well, speaking where is, the So, to overall categories

Got it. Thank That’s helpful. you.

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

and everyone I have here brand sharing market thank challenges talented teammates to I for future with of I’m our joining PEOPLE. to grateful is beauty we with our building for I’m WXLL the Well, you bright. meeting believe my share. about Keys. energized today. us new Alicia the potential forward pandemic by so And look lifestyle more this fundamentally

and forward Of continue we’ll the Thank be some confidence copying course, again ahead, of our I look months XX. challenged stockholders to be but team. have to We speaking big and on in with well, meeting August environment around at strategy you, annual many you our by us our and

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

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