e.l.f. Beauty, Inc. (NYSE:ELF) Q2 2024 Earnings Call Transcript

One of the reasons why we did a spot on the big game this past year was being able to cast a much broader net to consumers that may not know of e.l.f. And we find both those strategies to be effective and continue to increase our awareness not only in the U.S. our recently launched awareness campaign in the U.K., we feel really great about. So you’re going to continue to see us do and continue to disrupt the market and retain our community in a way that resonates with them and continue to bring more people into the franchise.

Operator: Our next question comes from Andrea Teixeira from JPMorgan.

Andrea Teixeira: So Tarang, you spoke about the innovations, especially in the white spaces in skin as well as in lipsticks and mascaras, which you wonder SKU relative to what your potential power can be in your market share. Can you comment a little bit on how you progress towards the objective of having a similar market share. And interesting, in my channel checks I’ve been seeing some stockouts in lip especially our lip oil. So I wonder if embedded in your guidance, do you have that improving? Or is there anything you can share in terms of getting more, I would say, capacity to execute the plan. And obviously, you have a very fast response to market. But just curious if you were able to most recently improve that. And then just related to that, I know [indiscernible] also has been very — there has been increasing awareness.

And in the past, we were able to get into Sephora Canada. Just wondering if part of the opportunity for taking Naturium and protein of course, your hero products everywhere. Is there any chance you can see also so care expanding even further into other areas? Or it’s going to be mostly on the the core products in health?

Tarang Amin: Andrea. So I would say we’re making tremendous progress across every category. We’re competing again. We talked about our leadership in 16 subsegments of color cosmetics. We’re also conquesting some of these bigger other categories. So if I look at skin care, I feel great e.l.f. SKIN was up 129%, almost 10x where the category was for the quarter, really driven by the innovation that we have in that category and the awareness building we’re doing there. You mentioned [indiscernible], where we’ve also had good share progress as well as lip. On lip, I think a lot of this has to do with our approach to innovation, but we’re constantly listening to our community and taking inspiration from them in prestige, our community a while ago had seen a prestige [indiscernible] product that they really liked, but it was priced at $40.

So just in this past quarter a few weeks ago, we launched our loop oil priced at $8 versus that prestige at $40. And we’ve just seen incredible risk as you mentioned, I mean, I think it’s sold out the first time we put it out. We have gotten more inventory on that product, and you’ll continue to see it do extremely well, and it’s significantly building our presence in lip. So we feel good about our two-pronged innovation strategy, really focusing on these franchises continue to build year after year as well as conquesting some of these other bigger categories and are making great progress there. And then in terms of Keys Soulcare, we feel great about our efforts to increase awareness on Keys Soulcare. We had a pretty big innovation in the last few months, and it’s like skin, saw tremendous response to that and you will be hearing about additional distribution points in the future on Keys Soulcare as we continue to build awareness on that brand and certainly couldn’t be more excited about Natorium and what we could do with Naturium.

As a reminder, Naturium did close to $80 million of net sales or $90 million of net sales actually really was a pretty limited distribution footprint, primarily a Target, Amazon and their own site. So we feel that we can increase its presence in distribution as well as in the future, take it to new distribution points. So multiple vectors of being able to address the white space we have, both in skin care as well as some of these other categories.

Operator: Our next question comes from Bill Chappell with Truist Securities.