ELF has additionally shortly gained notoriety for its merchandise which might be plant-based, not examined on animals.
ELF Magnificence: Sturdy Income, Incomes File
The Oakland, California-based firm operates 4 manufacturers: ELF Cosmetics, ELF Pores and skin, Properly Folks, and Keys. Gross sales rose for the fifteenth consecutive quarter within the interval ended September 30. The corporate’s income from plant-powered merchandise grew 33% to $122.3 million by means of the quarter. the corporate’s retail and e-commerce channels.
Earnings efficiency has been barely extra variable. Earnings per share of 36 cents confirmed sturdy development of 71% within the September quarter. However EPS is forecast to drop 5% within the fiscal third quarter, in accordance with FactSet. Money readily available on the finish of the quarter was $85 million, greater than double the $42 million the earlier 12 months.
The cosmetics firm gave an upbeat outlook for the 12 months ending March 2023. Administration presently predicts gross sales development of twenty-two% – 24%, revised upward from 14% -16% .
Jefferies analysts consider that the corporate’s gross sales are extra depending on the Chinese language market than its friends. ELF Magnificence’s 100% cruelty-free coverage prevents their merchandise from being exported to China as a result of the legislation there requires animal testing.
Morgan Stanley analyst Dara Mohsenian, JPMorgan’s Andrea Teixiera and Piper Sandler’s Erinn Murphy are all bullish on the inventory. Raymond James’ Olivia Tang charges the inventory as outperformance.
Mohsenian and Tang have a worth goal of $50 whereas Teixiera has a decrease goal of $48 for the inventory. Shares of make-up inventory spiked previous the 50 mark after earnings on Nov. 2. Murphy has a worth goal of 55.
Development of the worldwide cosmetics market
In on-line gross sales, Elfcosmetics.com faces competitors from Sephora.com and to a lesser extent from Ulta.com.
Non-public fairness agency TPG Development in 2014 acquired a majority stake within the make-up firm. The corporate raised $141 million in its IPO in 2016. In 2020, ELF Magnificence bought W3LL for $27 million in money. W3LL has observe document of being plant-free and cruelty-free.
Make-up firm ESG observe document
ELF Magnificence prides itself on being a 100% ESG play with no animal testing and authorized cruelty-free by Folks For The Moral Therapy of Animals (PETA). Make-up companies additionally declare a “clear” profile. To verify it, it stays away from greater than 1,600 substances like parabens, phthalates and sulfates which might be restricted by the FDA and the European Union’s Beauty Regulation.
ELF additionally gives 40 merchandise which have been verified by the Environmental Working Group (EWG), the trade normal for “clear and wholesome” magnificence merchandise. In line with President and CEO Tarang Amin, the make-up firm has revamped greater than 350 holding items, or SKUs, to stick to “clear” requirements.
In August, its third-party manufacturing facility was Truthful Commerce Licensed. Truthful Commerce requirements “promote sustainable livelihoods and protected working situations for manufacturing unit workers, defend the setting, and clear provide chains.”
Sturdy Teenage Calls
ELF Magnificence has a powerful presence on TikTok and Twitch. Shoppers aged 18 to 24 accounted for 32% of holiday makers to Elfcosmetics.com, adopted by 25 to 34 12 months olds with 24% of holiday makers.