E.L.F. Beauty, a cosmetics company based in California, experienced a significant boost in sales during the fourth quarter. This growth was predominantly driven by the success of the company’s digital channel, following the closure of all physical stores in February 2019.

In the fourth quarter, which ended on March 31, 2020, E.L.F. achieved net sales of $74.7 million, representing a 13% increase compared to the same period the previous year, where sales reached $66.1 million. Tarang Amin, the company’s chairman and CEO, emphasized the integral role of their investments in e-commerce in facilitating this growth. He further highlighted that they witnessed triple-digit sales growth on their own website, elfcosmetics.com, as well as various retailer websites in the weeks following the end of the quarter.

Despite the positive digital gains, E.L.F. faced challenges resulting from the closure of all 22 retail stores. However, the company managed to significantly reduce its net loss for the quarter. It reported a loss of $0.3 million, or $0.01 per diluted share, compared to a loss of $17.9 million, or $0.37 per diluted share, in the same period the previous year.

For the full fiscal year 2020, E.L.F. witnessed a 6% increase in net sales, totaling $282.9 million compared to $267.7 million in fiscal 2019. Moreover, the company shifted from a net loss of $3.1 million in the prior year to a net income of $17.9 million, or $0.35 per diluted share.

However, E.L.F. acknowledges the challenges posed by the ongoing COVID-19 pandemic. The company has experienced a significant decline in retail sales and expects this trend to continue due to the health crisis. Despite this, E.L.F. has refrained from providing specific financial guidance given the uncertainty of the situation.

To combat the economic challenges posed by COVID-19, E.L.F. has implemented various cost-cutting measures. These include scaling back marketing and digital investments in proportion to net sales, reducing merchandising and operating costs, and limiting capital expenditures. Additionally, the company has accessed $20 million of its $50 million revolving credit facility and made amendments to its credit agreement to gain more flexibility.

Overall, despite the obstacles faced in 2020, E.L.F. Beauty remains optimistic about its future. Tarang Amin expressed confidence in their ability to navigate the challenges brought about by COVID-19, stating, “Given our fiscal 2020 results and execution of our five strategic imperatives, we believe we are well positioned relative to the category to navigate the challenges posed by Covid-19.” The company remains committed to leveraging its digital channel and adapting to the evolving retail landscape.

Useful links:
E.L.F. Cosmetics Official Website
The Strategy Behind E.L.F.’s Retail Blackout