e.l.f. Beauty: Value-Oriented Products Grow Alongside Prestige Offerings

Offering the right value proposition is drawing consumers to beauty products, according to e.l.f. Beauty.

The brand reported in a Wednesday (Feb. 1) earnings release that it recorded 49% net sales growth and completed its 16th consecutive quarter of net sales growth during the three months ended Dec. 31.

“We’re known for our value proposition,” e.l.f. Beauty Chairman and CEO Tarang Amin said Wednesday during the company’s quarterly earnings call. “We make the best of beauty accessible to every eye, lip, face and skin concern.”

Amin gave the example of a primer. When a prestige brand released a primer priced at $52 that quickly became a leader in the higher-end category, e.l.f. put its own twist on the product and launched a primer priced at $8.

Over the last year, the e.l.f. product outsold the prestige product nine to one, but both primers saw double-digit growth in unit sales. The new value-oriented item expanded the category, Amin said.

“We often get questions whether our growth can be attributed to trade-down from prestige or trade within from mass,” Amin said during the call. “While we see the benefits of each, we believe the more fundamental point is that our value proposition creates accessibility, driving category expansion.”

Cosmetics, skin and hair care products are often viewed by consumers as purchases that are within both the essential and the discretionary spheres, so there has been a heightened focus on consumers trading down in the category.

This trend comes at a time of increased consumer stress when 70% of consumers are cutting back their spending on discretionary retail purchases to cover the cost of essentials.

Together with the value proposition, Amin attributed e.l.f. Beauty’s growth to its innovation and marketing.

The company’s innovation includes developing products that serve more than one function — such as a primer that also delivers skincare benefits. Its marketing successes include social media campaigns that reach out to new audiences, Amin said.

Following the momentum it saw during the most recent quarter, e.l.f. Beauty said in its Wednesday earnings release that it has raised its outlook for fiscal year 2023 from the previously announced 22% to 24% year-over-year increase in net sales to 38% to 39%.

“We expect these three drivers of our performance — our value proposition, powerhouse innovation and disruptive marketing engine — to continue to fuel our results,” Amin said during the call.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.