ELF @ Consumer Analyst Group Conference

February 23, Elf presented at the Consumer Analyst Group of New York Conference (CAGNY)

Some highlights from the CEO Tarang Amin’s discussion are,

  • The best way I know how you can build brands is lead innovation in the category
  • CEO has 33 years experience in consumer brands having worked in paper, food, pet, home care, health, and nutrition
  • Top ten brand among teens in SKIN and just started focusing on this market
  • Most productive brand on a dollar per foot basis at three biggest customers: Target, Walmart, and Ulta
  • 470 employees is driving 1B in net sales, $220M in adjusted EBITDA, and 10B market cap
  • The company is 2/3rds women, 1/3 diverse
  • Only beauty company to be fair trade certified
  • Extraordinary pricing is really driving category expansion
  • “We’re an e.l.f. ing entertaining company”
  • Only top five brand to have its own direct to consumer site
  • Quality of products has gone up every year enabling us to replicate holy grail products over and over
  • Proactively rotate SKUs about 25% annually, don’t let retailers tell us when something dying at the shelf, proactively doing ourselves
  • Rotation of products is driven by Beauty Squad who has lots of insights from data
  • Taking our marketing investment from 7% of revenue in 2018 up to 24% today
  • Marketing ROIs give confidence to invest behind marketing and digital initiatives
  • Adjusted EBITDA and adjusted EPS are outpacing revenue growth
  • Legacy companies they compete against are anywhere from 60 to 100 years old
  • Incredible growth in the UK, increasing rank every single year, 10x growing our consumption and can 10x where the market is now to go from number six to number one
  • The Italians love hot American brands and they know your brand
  • Day they launched in Italy lines went down the entire block
  • Became Douglas’ number one brand not just in mass market, but across prestige
  • Fast Company recognized Elf as one of the world’s most innovative companies, the only beauty company on the list.
  • “It’s amazing how much more growth we have in Canada and the UK”
  • SKIN has this incredible value proposition, $9 average retail price appeals to GenZ
  • Naturium $18 price point, mass prestige prices
  • 40% of Naturium users are men as it’s in the body category as well
  • “I don’t think people appreciate this One Team, One Dream approach, a high performance team culture, how we bring people in, how we interview on that, how we train on that, that’s going to be one of the key things”

I am impressed that this 470 person company is able to grow like this and create a massive amount of buzz around their brand, where they have lines down the block on their Italy launch. Surprising to me is they say Adj EPS and EBITDA are growing faster than revenue, or basically the bottom line is growing faster than top line. However top line is already growing at 85%!

Sounds like they are stepping on the gas pedal for marketing spend based on the incredible ROI it has. I expect this to drive revenue and earnings for some time going forward.