Digital drives e.l.f. Beauty’s net sales but incomes slip

By Becky Bargh 5-Nov-2020

The company’s increased employee compensation costs and investments contributed to the downturn in net income

Cosmetics owner e.l.f. Beauty has reported a 7% uptick in net sales for Q2 despite a slip in its net income for the period.

The group saw a US$4.7m boost to $72.4m in the three months to 30 September compared with $67.6m for the same period in 2019, which it said was primarily driven by the strength of its digital platforms, as well as international growth.

However, e.l.f.’s net expenses increased 5% to 62% net sales, or $45.2m, compared with the same period in 2019.

This, the company said, was due to increased employee compensation costs as e.l.f. expands its marketing and digital capabilities.

As a result, net income was down to $0.4m, or $0.01m per diluted share, compared to net income of $6.5m, or $0.13 per diluted share in 2019.

“This is our seventh consecutive quarter of net sales growth,” said Taran Amin, e.l.f. Beauty’s CEO and Chair.

“We believe the focused work behind our strategic imperatives has set the foundation for long-term growth and provided a platform for our strategic extensions.

“While we expect the near-term operating environment to remain dynamic, I am confident in our ability to continue to execute our strategy and emerge with an even stronger, more diversified brand portfolio.”

The make-up category has been hardest hit by Covid-19 lockdown as consumers spend more time indoors and more money on self-care.

Estée Lauder Companies’ make-up sales were down 62% by Q2 and it has been forced to cut more than 2,000 jobs globally.

Meanwhile, L’Oréal’s Luxe Division, which includes Urban Decay, IT Cosmetics and Giorgio Armani Beauty, saw a downturn of 16.8% in the first half of the year.

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