e.l.f. Beauty at dbAccess Conference: Strategic Growth and Expansion

On Thursday, 05 June 2025, e.l.f. Beauty (NYSE:ELF) presented at the 2025 dbAccess Global Consumer Conference, providing a strategic overview that underscored its growth trajectory and challenges. The company reported consistent sales and market share increases, while also addressing tariff impacts and international expansion plans.

Key Takeaways

• e.l.f. Beauty has achieved 25 consecutive quarters of net sales and market share growth in the U.S.
• The company focuses on offering prestige-quality products at accessible prices, driving innovation and market disruption.
• International expansion is a key growth strategy, with successes in Canada and the UK.
• The acquisition of Road is expected to enhance financial performance and expand product offerings.
• e.l.f. Beauty’s marketing model emphasizes community engagement and digital insights.

Financial Results

• e.l.f. Beauty has maintained an average sales growth of at least 20% over the past 25 quarters.
• Gross margins have increased from the low 40s to over 70% through a strategic innovation mix.
• A $1 price increase across the portfolio has resulted in an estimated 14% increase in average unit retail prices, now approximately $6.50.

Operational Updates

• Production in China has been reduced from nearly 100% five years ago to about 75% today, with plans to decrease further by year-end.
• The company maintains a consistent SKU count, with a time-to-market of approximately 26 weeks for new products.
• e.l.f. Beauty’s market leader status is supported by 55% unaided brand awareness, indicating room for growth.

Future Outlook

• The company aims to replicate its U.S. success internationally, focusing on markets like Canada and the UK.
• Growth in skincare will continue through e.l.f. Skin and the Naturium acquisition.
• Road’s potential will be maximized through retail expansion with Sephora and ongoing innovation.
• Continued investment in marketing and community engagement is planned to enhance brand awareness and affinity.

Q&A Highlights

• e.l.f. Beauty employs a balanced approach to mitigate tariff impacts, including pricing strategies and supply chain optimization.
• Innovation is community-driven, inspired by prestige products, and focused on delivering superior value.
• The company’s digitally native marketing model engages and entertains across multiple platforms.
• The acquisition of Road is seen as a strategic move due to its disruptive nature and growth potential.

For a more detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - 2025 dbAccess Global Consumer Conference:

Unidentified speaker: Okay. Welcome, everybody. For our next session, I’m thrilled I’m thrilled to welcome for the first time ever the e.

F. Beauty Company to our conference. And with us today, chairman and chief executive officer Tarang Amin. Tarang, nice to nice to see you here.

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Thank you. For having me.

Unidentified speaker: We’re gonna use the entirety of our time for q and a, and we will just dive right in. So Okay. Tarang, I think, you know, as I said, your company is new to the conference and and arguably newer or maybe at least less familiar to many of many European investors. So I guess first question is just, you know, who is e. F, and what what do you think differentiates it most from from the rest of the beauty industry?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Sure. So, again, thank you for having me. E. F. Was founded twenty one years ago with a revolutionary idea at the time.

This is 02/2004. They set out about setting selling cosmetics over the Internet for $1 each. Everyone thought the founders are crazy. This is pre iPhone. You couldn’t sell cosmetics over the Internet.

You certainly could make money at a dollar, but they figured it out. While we’ve migrated over time in different price points and different channels, that core is still with us. Our mission is to make the best of beauty accessible to every eye, lip, face. E. F.

Actually is an acronym for eyes, lips, and face, and we make cosmetics and skin care. And we’re really known for and what differentiates us is our ability, our unique ability to have prestige quality and take inspiration from our community and introduce those products at a much better value. That value proposition has really propelled the business for the last twenty one years. We just completed our twenty fifth consecutive quarter of net sales and market share growth in The US. We’re one of only, I think, five public companies consumer companies in The US out of 546 that’s been able to grow sales for twenty five consecutive quarters, averaging at least 20% sales growth.

So we’re known for high growth. Core differentiators, again, is our value proposition, our powerhouse innovation, again, that unique ability to take prestige quality and introduce it at incredible prices, and our disruptive marketing engine. And those have really propelled the business for a very long time. Really, out of our twenty one years, I think all but one have been pretty strong growth.

Unidentified speaker: Great. And I think, you know, one initial reaction is, you know, a a low price kind of mass market beauty positioning. It’s typically been challenged and very competitive. Is is e. F.

Past path to growth, you know, share gain within that mass beauty segment, or do you believe e. F. Can redefine the category and able to take share from Masstige or even Prestige?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. Well, we’re definitely a a disruptor in the category. And I would say while we’ve grown share, again, for twenty five consecutive quarters against the mass players, we’re now the number one unit share brand in The US, number $2 share brand, but with clear line of sight of clear leadership. I think what really differentiates e. F.

Is our ability to expand different categories. So I’ll give you one example. We introduced many a few years ago, our poreless putty primer. There was a prestige item that was selling for $56. We saw an opportunity.

We studied it. We put always put our elf twist on. We never directly copy a a particular product. We introduced our poreless putty primer instead of at $56 at $9. And then we track the prestige item over time, and we saw it continue to grow.

There was a demand a a certain niche of consumers who love paying $56 for that primer, but the vast majority of consumers can afford $56 for a primer. In fact, I mean, I think around the world, most consumers live paycheck to paycheck. And so this ability of having access to a category they never could have access to, we we saw the prestige item and continue to grow. We sell nine times the number of units as that prestige item. So it’s our ability to actually expand the category.

We certainly are growing share and have a great position there, but the more important thing is our ability to bring millions of consumers access to the best of beauty they previously couldn’t.

Unidentified speaker: Mhmm. And you’ve described the company as a twenty year old start up. You know, lots of focus on speed and agility as that example, I think, demonstrates. Can you talk about how that, you know, manifests a bit more in your execution and how you keep alive that culture? And may maybe also touch upon the digital digitally native roots and how that plays into it.

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: So I I’d say, you know, I always say our biggest competitive advantage is a passionate team of owners in a high performance team culture. We’re unique in our space in that we grant every single employee equity every single year, strongly aligning their interest with the long term interest of our shareholders. And we put them in a culture that really focuses on developing passionate relationships, giving pinpoint specific feedback to help the team succeed, strong mutual accountability. And it’s basic it’s led to that along with the overall demographics of our workforce. 74 of our employee base is women, 76% are Gen Z and millennial, 40 four percent are diverse.

And the reason why that’s important is they absolutely reflect the consumer base that we are the community that we wish to serve. And so it gives us a huge advantage in terms of speed, both the culture, actual owners of of businesses, and the ability to actually move at something we call elf speed. So the our our from initial idea to selling online, from concept to selling online, is around twenty six weeks as compared to a few years for a number of our competitors. We have a unique innovation engine that’s integrated with our supply chain that gives us this ability to really jump on it. And then the digitally native roots have always been with us.

Our main engagement model from a consumer standpoint is all digital. We’re not a traditional beauty company in terms of big TV ads, lots of print, and billboards. Our approach is digital, and we live with where our community lives, and it’s allowed us to really have strength across multiple demographics and and which which I’ll touch on in a minute here.

Unidentified speaker: Yeah. I mean, so taking a step sideways, tariffs, clear topic of conversation. It’s definitely this week here at the conference. Can you talk about your tariff exposure? The supply chain, you know, is very, very rooted in in China, the mitigation strategies around that, and how that has played into your ’26 planning.

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. So I would say, you know, we’ve been subject to tariffs since 2019 in The US, the 25% that were imposed by the first Trump administration. And the way we dealt with that is really a balanced plan. Back in 2019, almost a % of our production came out of China. We took pricing a dollar up on a third of our lineup.

We had cost concessions, supplier concessions from our suppliers. FX helped us. And we actually, in that period, grew margin in even in the face of 25% tariffs. We’ve took a second round of pricing in 2022 with all the inflationary pressures many companies are facing post pandemic, and we just recently announced last week, we announced another round of pricing $1 up. Now we have a phenomenal value proposition.

Our average unit retails in cosmetics around $6.50. Legacy mass cosmetics players are around $10. Prestige brands are well over $20. So we do have a great pricing umbrella, and we’re quite disciplined in terms of pricing. We’ve only taken three price increases in the twenty one year history of our brand, yet we’ve been able to grow our gross margins from the low forties to over 70% primarily through innovation mix.

So we like the balanced plan that we have. It’s a combination of pricing that we’re taking, supply chain optimization. As I mentioned five years ago, a % of our production was in China. Today, it’s about 75%. By the end of the year, it’ll be even lower than that.

But importantly, we’re committed to the supply chain we have. We have a massive competitive advantage when it comes to our supply chain in terms of having the best combination of quality, cost, and speed in our industry. And so we wanna be quite thoughtful in terms of how we continue to optimize. And in fact, our optimization on supply chain has less to do with tariffs and more to supply the rapid global demand that we see for our brands. And then the third thing is continued business diversification.

We’ve both in our brand portfolio, but also international is the fastest growing part of our our business. About 20 of our business is outside The US today, and that’s rapidly growing in terms of mix. So we’re gonna use that same balanced plan. And the last thing I’d say, back to pricing, is we’re highly transparent with our community. So when we take pricing, we actually announce it on social to our community.

We’re facing these cost pressures. We’re gonna absorb many of them, but we’re gonna pass on a dollar. We get 98% positive consumer sentiment. I’ve been in the consumer space thirty four years. If you told me that 98% of your consumer base would be positive to you taking pricing, I think a lot of it, Diesel’s, we take very seriously our ability to deliver the superior value proposition.

Our community knows it, and that’s allowed us to be able to successfully have pricing over time and have that balance plan.

Unidentified speaker: And while you haven’t given guidance for ’26, the last couple of price increases or the last two price increases, I think, came with very limited and certainly less than expected elasticity.

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Correct? No. That’s right. And I think it’s that disciplined approach. We take value very seriously.

We’ve used innovation mix as a way of driving margins up, and so our everyday value is still a superior proposition. And so we know we have pricing power as as a brand, and but we’re quite disciplined in terms of when we take that, usually only for external events.

Unidentified speaker: And and, clearly, the tariff the tariff could be anything. Right? With tariff moves around, but I think at at the current rates, you’d called $50,000,000 headwind on COGS, which is about a 13% headwind. The $1 price increase on the total portfolio, you know, inclusive of skin care, is, by our math, about a 14% increase. So is this is the pricing strategy to protect margin or just to to offset, you know, dollar the dollar cost inflation?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Like like I said, it’s a balanced plan, so we we never look to pricing to fully get you necessarily to the margin rate that you have. Mhmm. Because we do have the other levers and to continue supply chain optimization and business diversification. And so I think when we’re once we have greater clarity on what the long term tariff environment is, we’ll gladly provide guidance and and lay all that out.

Unidentified speaker: Great. Okay. So as you mentioned, innovation critical to e. F. Success.

What is e. F. Innovation process, and how is it differentiated?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. So we have a differentiated innovation process. The unique ability of taking inspiration with prestige or the best products or what our community demands and bring it to market at a very fast pace with a superior value. I’ll I’ll describe one example. Our community will come to us with what they want, and they’ll often and we engage two way conversation on social.

A couple years ago, they came to us, and Dior has made these lip oils for more than a decade. But for some reason, the last couple years, they took off virally. And the community will be like, hey. Elf, help us out. We we love this product, but we can’t afford $38.

We’ll study that product, and we’ll basically say what do consumers like. They like the glossy finish. They like the pigmentation on their lips. We’ll also study what don’t they like. And many for many consumers, that product dried out their lips.

The applicator was quite small. Lip oil is something you have to apply throughout the day. So when we introduced our lip oils, a completely different hydrating formula that solved the thing that consumers were were complaining about with a much bigger doe foot applicator, still same kind of prestige quality, amazing payoff, glossy finish. And instead of the $38, we introduce ours at $8. Right?

You introduce that product, community’s been wanting it, it goes viral right away. In fact, the lip oils are probably our biggest product launch ever, and we can do this over and over again, basically taking consumer input as well as our innovation team. They’re constantly scouring the earth for different ideas. Like I said, our consumers I mean, our employees represent the community, so they’re highly in touch with what are the trends, what are the things that are gonna come out. And then the other thing about our innovation approach is we’re not like, many cosmetics company kind of do a one and done.

They launch something, they have to launch something else, and they end up doing a lot of SKU proliferation. For us, we build these growing franchises. If you look at our PowerGrip franchise, our Halo Glow franchise, a number of our core franchises, every one of them grows every year because when we put innovation, it kinda lifts the entire franchise. So it’s a much more franchise approach, a bigger focus on productivity and SKU efficiency, and so that’s the combination. We have a great I think through our innovation, we have the number one or two position in 19 segments of the cosmetics category.

Highly defensible, very high share positions in those, and the ability to conquest of the bigger categories we have lower share in with through that continued innovation approach.

Unidentified speaker: And you’ve talked about this in the past, but just how do you leverage experiences, you know, online in in DTC to increase the odds of new product success when they move in into brick and mortar channels?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. Well, like I say, we we we’re highly engaged with our community. In fact, my chief marketing officer sometimes traumatizes me by dragging me on TikTok live. She’ll put me on TikTok live, and and she’ll be alright. You got the big boss here.

What do you want? And, you know, our community is not shy. I think last year, I got on one of those TikTok lives, and the community goes, oh, there’s this great prestige bronze and drops. We like it, but we can’t afford $40 for it. Help us out.

And I’m looking at the chat, and I’m like, alright. You want you want bronze and drops? And then there’ll be, like, another hundred chats. No. No.

We want no. No, boss man. We want them now. Get them. You know, I’ll leave that call a bit traumatized.

I’ll call my head of innovation, and I’ll say, well and our product pipelines go out at least three years. I’ll basically say, alright. Please tell me we have on our pipeline somewhere bronzing drops. She goes, yeah. No.

We’ve been studying the trend. We know that that is highly appealing to consumers. And I’m like, oh, great. When when are they coming out? She’s like, well, we have slated eighteen months from now.

I’m like, oh, no. No. I can’t go on another TikTok live and have our community berate me on these bronze and drops. And so we sure and we have that ability to pull something up where in six months, we launched those bronze and drops. They’re a great great kinda hit last last year.

And that ability, again, to be well in touch with your community. We’re very strong on social. Community is very much in touch with us, and both our team’s own ideas from an innovation standpoint, but also our ability to jump on something that is trending or and many of these items that we look at have actually existed for a long time in prestige. So it’s we’re also not dependent on whatever last year’s cycle of innovation was or the last couple years. A number of the things we do have been around for a while.

Though they have a certain point where they really take off, we build them into our franchise approach. Great.

Unidentified speaker: There’s you know, the brand has historically skewed young. TikTok live is sort of part of the example of that, which is a great thing in many ways and something a lot of, you know, legacy brands struggle with. But there’s been some question whether it can appeal to consumers as they age or or appeal directly to older consumers. How do you respond to that?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. I’d say, look, we have multigenerational appeal. This ability of having prestige quality at great prices really appeals to every age group. Now we’re particularly strong in Gen Z. We’re the number one brand amongst teens.

I think we’re three and a half times mindshare to the number two brand on that list, so quite quite strong on Gen Z. But we’re also the most purchased brands among Gen Alpha and millennials, so you find consumers following us up. And then we have this effect of, like, the reverse effect. Mhmm. It used to be traditionally in cosmetics and skin care.

The mothers would teach their daughters. Maybe the mothers would go to the makeup counter, do a makeover, kinda learn how to do makeup. Our consumers are incredibly digitally savvy. It’s almost the other way around. The moms are tired of keep dragging them to Target or the kids keep dragging them to Target or Walmart or Ulta Beauty, and we find that our younger consumers basically tell tell their mothers, like, mom, why are you paying $50 for foundation?

The e l f one’s actually better. And so we’re finding every single demographic we’re picking up more consumers in, particular strength in Gen z, Gen alpha, and millennials, but we’re also picking up that older generation over time. And certainly, we can see longitudinally our ecommerce business has existed for twenty one years. We can we can track, and we see that consumers stay with us, particularly given the quality of the products.

Unidentified speaker: Yep. And the marketing model is different. I think the fact that you’re on TikTok live is part of part of the differentiation. It’s it’s not just leveraging influencers or or celebrity endorsements, but really creating content and not being afraid to take on, you know, pretty bold collaborations, liquid death, Dunkin’ Donuts, etcetera. So, you know, I guess, how do you foster such creativity, and then how do you control it to make sure that it’s, you know, it’s really contributing to brand equity in the right way?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. So if you look at our marketing ROIs, they’re multiples above industry benchmarks, and they have been for a long time even as we’ve taken up our marketing spend over over time. The approach is very digitally native. Primary engagement model is digital for us, and we live where our community lives. We were the first beauty brand on TikTok a number of years ago.

I remember my CMO said, hey. We need to get on TikTok. That’s where Gen Z is. I’m like, that gen is that where Gen Z is? And we absolutely.

Now what’s TikTok? This is a number of years ago, but we not only are strong on TikTok, we have our own channel on Twitch under the insight that 70% of our consumers either play video games or watch others play video games. We have a female empowerment platform on that. We have the number one branded experience on Roblox. It has, think of a 98% rating over 16,000,000 plays.

So we’re quite strong across multiple digital platforms, and the entire approach is how do we engage and entertain our community. And we sometimes say, we’re an entertainment company that happens to sell beauty products, but that level of engagement is what drives those very strong ROIs, and we have great ways of measuring it across core core vehicles as we as we look, and we’re constantly testing back to our digitally roots. We’re constantly testing. We’re constantly learning and pivoting, and and there’s real strong affinity. And and and all the all the metrics support that.

Our unaided awareness has basically gone up 20 points just in the last few years. I’ve been in the consumer space a long time. I’ve never seen a 20 increase in unaided awareness. It’s about 33% right now. The market leader has 55%, so we still have plenty of room to grow.

Our brand equity scores have gone up. You take a look at our purchase patterns. Every metric has gone up through that combination between the innovation and the way to engage our community. It is a unique advantage.

Unidentified speaker: Okay. Switching gears a little bit. The the the SKU assortment is, in many ways, you know, pretty simple. You know, lots of power SKUs that have great scale and great velocity. But, clearly, as, you know, as the brand expands, you explore more white space, SKUs SKU count inevitably increases.

How do you guard against SKU complexity, and how do you guard against diminishing returns on new innovation?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: You know, fundamentally, the business was founded on a productivity model, and by that I mean we have a big online business. That online business provides us insights that we use to decide what we’re going to take to retailers. When we first started at Target, we are unique. Most of our competitors will wait till an item, you know, gets in the bottom 50% of the category rankings, the bottom third, and the retailer will discontinue an item. Our approach is different.

We’re quite proactive. Every year, we change out as much as 20% of our assortment in retail shelves, taking those insights we have from our digital business, also our beauty squad loyalty program. We have 6,000,000 beauty squad loyal loyalty members that are a rich source of insights, also first party data to help us optimize our marketing. And because of that optimization, we’re able to have the strongest productivity of any cosmetics brand in The US. Our and and that’s measured by dollar per linear foot of sales.

We outsell every other brand by a wide margin. The other important thing is over the years, we’ve been able to take that dollar foot productivity up at every single customer that we’re in. So not only are we the most productive brand that Ulta Beauty, Target, Walmart, really all of our customers will carry, but our that ability to take that productivity up every single year is actually been the biggest driver of our business. We’re picking up space every single year at every you know, most of our customers where you’ve got a good track record of picking up space, but the biggest driver is our productivity model. And what that’s allowed us to do, I’ve been CEO eleven and a half years.

Our SKU count is relatively constant over that eleven and half years. We’re constantly weeding and feeding. We’ll have a broader assortment online, but we have these power kind of SKUs and lineups, and that ability to drive productivity is off to a virtuous circle. It also allows very strong unit volumes. We’re unique in our space that we primarily drive our business through unit growth versus average unit retail growth, and those very strong unit growth in turn also aids our supply chain and the the cost that we’re able to achieve.

Great.

Unidentified speaker: Now how do you frame the opportunity? You mentioned earlier color cosmetics roots, but you moved into skincare. So how do you frame that opportunity? And, I guess, what’s the interplay F.

Skincare brand itself and the the the acquired brand Naturium?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. Skincare is a huge strategic priority for us. We started a few years ago. We had strength, as I mentioned, in the cosmetics category, particularly in the face products, the complexion products. So they gave us permission to say, hey.

Should we do something in skincare? We built up that team. Mhmm. Our head of innovation, you know, drove La Mer, a number of the Lauder brands. Our head of r and d is a twenty year skincare scientist from Johnson and Johnson.

So we built up that capability, and we introduced e. L. F. Skin. E.

L. F. Skin very much is the same model as e. L. F.

Cosmetics. We look and we take inspiration from the best products of prestige, introduce them at incredible value, and and we’ve seen great success. E. F. Skin is now, just in a few years, a top 10 brand in The US in skincare.

And and the remarkable thing about that is the other brands on that list average about sixty three years in age. So we’ve been able to do in a very short amount of time what’s taken decades for other players to do, and they’re amazing products. The incredible quality for the price that you get. We have, though, two of the fastest growing products brands in skincare. E.

L. F. Skin is one of the fastest growing. The other one is Naturium. Naturium is a brand that we bought in 2023.

What really appealed to us about Naturium is they went from zero to a hundred million dollars of net sales in less than two years, which is remarkable because there are many brands in cosmetics and skin care is a very fragmented category, but very few have been able to scale. In fact, in The US, there’s only 26 that have more than a hundred million in retail sales, not even net sales. So when we saw Notorium, we went in and Notorium is it’s founded by Susan Yara. She’s an influencer, but had this vision of how do you create the science of consistent skin care for every everyone, everywhere, every day, and these clinically effective biocompatible formulas. So it differentiates from e.

F. In terms of it’s a higher price point, around $18 on average, primarily appealing to millennial consumers versus e. F. Around $9 appealing to Gen z. But the other important thing is almost 40% of Naturium’s user base is men.

It has a very kind of neutral aesthetic. They’re very strong in body care products, and so we have two very different brands that both are amongst the fastest growing in skin care. And what we see, you know, over time, global skin care is bigger than global color cosmetics, and we have successful kind of, in a short amount of time, kinda proven our ability to be able to use both the same model in e. F. And have a very different model in Notorium and continue to grow that.

Unidentified speaker: Okay. We have not yet talked about international, specifically anyway, and you definitely are prioritizing, to a degree, overseas expansion. So I guess how maybe articulate the ambition and and and what you’ve seen over the last over the last several quarters.

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. So international is amongst the strongest growing parts of our business. For perspective, we’re a US company, been in The US for twenty one years, and really we’re just focused on The US. We have massive opportunity, we still do in The US. As I mentioned, we’re number two in dollar share, clear line of sight to number one core outright leadership.

And and and a further perspective on that, I talked about our productivity model before. The first customer we went into in The US was Target. They’re the first customer to carry Target. If you look at Target today, not only we are the number one brand, we have over 20% of their category. We see every other customer following that same trajectory.

So if I look at Walmart, I look at Ulta Beauty, I look at all of our main customers, you’re seeing that same kind of linear kind of line like Target had. So we have very strong hopes and track record in The US, but only 20% of our business is outside The US, and that compares to many of our peers that have over 70% of their business outside The US. So international is a massive opportunity. The best thing about international is our brands really resonate outside The US. The first place we started was Canada and The UK.

We’re now in a top two, three position in both those countries with a very limited distribution footprint. We we started in in The UK with Shoppers Drug Mart. Boots came calling on us. We’re in Boots. We have a very strong business there.

And the vast majority of our international business, frankly, over the last few years has been really driven by Canada and The UK. Mhmm. But we’ve been sequentially rolling the brand out, and our strategy is very much what I described in The US. We partner with a leading retailer in a market. They introduce and help establish the brand, and very quickly every other retailer wants e.

F. In in that market. We usually often see it also digitally first. And so in the last year alone, we’ve launched the brand with De Glace in Italy, Rossmann in Germany, Atos in The Netherlands. We just announced on our call CrowdVat.

We’re rolling out through the rest of The Netherlands and Belgium. And the interesting thing is every single customer we enter, we often enter in a top three position. Even last year, we entered Sephora Mexico. It was the best launch Sephora had ever seen. And if you think about Sephora Mexico, every other brand in that in that in that box is a prestige brand, and and but e.

F. Looks like it belongs. In Douglas, Italy, our our gondola is right next to Chanel, and it belongs. So it’s a very elastic brand in terms of that prestige quality at these incredible prices really resonate. And I’d say part of the success that we’re having internationally is so much of our strength in social in The US is consumed outside The US.

So long before we get into a market, this pent up consumer demand. I remember in Douglas, Italy, we asked them. We said, look. We we don’t have any employees in Italy. We’re an American brand.

How should we customize this for the Italian consumer? And they said, no. Don’t you don’t need to customize it. Italians like hot American brands. Sure enough, the day we launched in Douglas, there are lines down the block.

We quickly became, and we’ve maintained the number one position within Douglas Italy that talks about that strength. And the only argument we had with Douglas is that, you the only you guys are very strong in primers. Our power grip primers, the number one item in The US in all of color cosmetics across mass and prestige. We have a 63 share of the primer category. They said, you know, well, that that category doesn’t really exist here.

And I said, you know, look. We’re a test and learn brand. When we start with it, it’s a number one product for us. If it doesn’t work, we have other assortment. We’ll change it out.

Sure enough, not only we’re the number one brand with Nugloss in Italy, PowerGrip Primer is the number one item in in Italy as well. So this the world is more alike than different, and our value proposition, innovation, and market engine absolutely resonate outside The US. Great.

Unidentified speaker: The you know, among the news last week was the announcement to acquire Road. I and I guess I guess the question is why now? Why Road?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. What we saw in Road, this is a brand created by Hailey Bieber and her cofounders three years ago. It was just one of the most phenomenal businesses I’ve seen. I talked about how difficult it is, almost out of 19 hundreds cosmetics and skincare brands, how difficult it is to scale. Mhmm.

Well, Hailey and her team were able to take their business from 0 to $212,000,000 of net sales in three years, DTC only, with only 10 products. Never seen anything like that in my career in terms of the strength that you have. And so we’re always we’re a disruptor. We’re always attracted by like minded disruptors. To have a direct to consumer business that got to two over 200,000,000 in net sales with 10 products Yeah.

Not only caught our attention, it caught the attention of Sephora, the world’s largest global retailer. Fact, Sephora is so excited. Instead of their normal model of testing a brand as subset of their doors and then expanding from there, they’re gonna launch road in all of their US and Canadian doors this fall, followed by The UK by the end of the year. So we see massive white space for a road. And part of the reason why they are attracted to e.

F. Because they could have gotten probably a lot more money if they if they didn’t partner with us, is they were attracted by the disruption they see e. F. Continue to do, and we’re a founder’s dream. Instead of over integrating a brand, if you look at our brand portfolio, a few of our other brands, I mentioned Notorium and Susan Yara’s vision and being able to see that through, We appreciate Hailey has a unique vision in beauty, a very simple regimen, one of everything really good.

I talked about the power SKU lineup, and but her same approach in terms of community engagement. One of Rhodes activations, I mean, I’ve I’ve never seen consumers willing to camp out overnight, wait fourteen hours in line, not only to buy another product, but actually buy into the entire lifestyle. So this entire lifestyle beauty approach with incredible and Hailey is one of the best founders of of of Met, Incredible instincts, beautiful aesthetic, certainly a pulse on where consumers are and gives us another fast growing brand in our portfolio that we look forward to to helping her achieve her global ambition.

Unidentified speaker: Great. I mean, the the the pushback that I’ve heard from investors on it is simply that, you know, celebrity beauty brands have not always had longevity. So I guess, you know, how do you you know, how tied is is the brand to Hailey in your mind, and I guess how committed is she to staying on?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. No. We’ve we’ve we’ve traditionally stayed away from celebrity brands for that very reason of the volatility that you often see with them. I would tell you Hailey is way more than a celebrity. She’s one of the most thoughtful founders I’ve ever met.

The brand has some of the best brand metrics I’ve ever seen. It’s got the highest repeat rates almost any brand I’ve ever seen. That fervent community I talk about, you know, it’s where we can add value. We know how to build brands. We know how to really drive awareness.

As successful as Rode has been, it’s got 20% aided awareness, which is actually really good considering it’s only three years old, but most of the prestige brands in its space have well over 40%. We know how to drive brand awareness from my previous example. We have an incredible innovation engine that can also help within that, and then obviously our ability to in retail and be able to expand distribution. So this we’ve passed on most celebrity brands. This is not a celebrity brand.

Yes. It is very tied to Hailey. She’s an incredible founder. She’s in it very hands on, which is the other thing I’ve seen. Most celebrity brands haven’t worked because it’s just a celebrity lending their name to something.

It’s not a founder Yep. And the founder kind of core energy that goes into it. And part of why she sold to us is she wants to stay for the long term and basically have the brand reflect every every stage of her life. And she’s also built an incredible team. Their CEO, Nick Vajos, he and I worked together twenty years ago at Clorox.

I’ve known him for twenty years. He’s experienced kind of general manager, CEO, cofounders, the rest of that team, and we’ll be able to enhance that team further. So we would not have bought this, and we don’t need to buy anything, frankly. We’ve got strong organic growth within our existing portfolio, but when we see something special like a Notorian, like a Road that we know we have a long runway with, we’ll jump at that as well.

Unidentified speaker: What I mean, if you took the next couple of years, what do think the the biggest, you know, you know, one, two, or three growth opportunities is for Road? And also as a premium brand coming in with fantastic economics, what impact does it have on your p and l?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. So Road has unbelievable It’s direct to consumer in The US only. Mean, about 20% is outside The US, but a very limited distribution footprint. We know how to expand distribution.

Our first priority is gonna be fully maximize the potential we see with Sephora. They you know, in fact, I was just talking with them the other day. They couldn’t be more excited. They think this is gonna be their biggest launch over the last few years. They’re that excited about it, so we have a long runway.

Sephora’s had a great track record of further nurturing and growing brands over time. Certainly, global opportunity is there, not only with Sephora, with other retailers. So our our biggest priorities are continuing to enhance the team for the growth that we see, really make sure we broaden that distribution footprint. Their are joint ideas we have on innovation and category that we see opportunity for, so we we have a number of years kind of mapped out on on road as as as where we go through. And then the second part of your question?

Unidentified speaker: Just the impact on the p and l given Yeah.

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: And road is accretive. So we haven’t issued guidance, so we haven’t talked about what we have said is even after investments we plan to make in increasing marketing and the retail rollout at Sephora, including field sales support, etcetera, it will still be accretive to the e. F. Beauty company overall. So it’s it’s it’s great on both sides, and that’s that’s also the other beauty of it.

Yeah.

Unidentified speaker: As you say, you don’t need acquisition, and you just did one. But as you think about capital allocation priorities and and portfolio construction, because, you know, you’ve also with the two acquisitions you made, you’ve moved the price point higher. I don’t know if that’s intentional or just, you know, happenstance. But how do you think about portfolio construction, and and and what is the role of M and A over time?

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: Yeah. So for portfolio construction, we have this portfolio of complementary yet distinct brands that are quite different from each other. The one unifying theme for all of them is their disruptors and their they all have strong growth potential. In fact, the five brands we had before we acquired Rogue all grew in fiscal twenty five. So that ability of really taking that the core capabilities we have, seeing a founder’s vision of being able to continue to grow them.

And, you know, I talked about e. L. Skin, Naturium, e. L. F.

Color. I didn’t talk about Well People, which is a pioneering clean plant powered clean beauty brand. Well People was really it started as a capability investment for us. It it gave us the confidence to reformulate e. F.

Into clean formulations. The FDA in The US only bans 11 ingredients from cosmetics formulations. We don’t we don’t formulate with over 2,500, and we wouldn’t have been able to get there without Well People, but it’s also growing. Over a hundred EWG verified products, pregnancy friendly claim, it it’s absolutely perfect for for that audience of of moms and new moms, and we’re seeing strong growth there. Key Soul Care is a brand we created with Alicia Keys, and it’s based on holistic wellness, and we really support our vision of wellness.

So I would say portfolio construction for us is, does it disrupt industry? Does it complement our existing portfolio of brands? And there is an accessibility point to it. We don’t have any real aspirations in luxury. Even Rode, if you take a look at Rode’s price points, they’re entry level prestige.

So it’s fitting our mission of making the best of beauty accessible, but we have these distinct price points. So you’ve got e. F, as I mentioned, e. F color is around $6.50. E.

L. F skin’s around $9. You’ve got Notorium around 18, you’ve got Key Soulcare kind of in that early $20 price point, you’ve got Rode in the kind of that mid to high $20 price point, and so you’ve got differentiation kind of in price tiers, but they all share that ability of making the best of prestige accessible and different tiers, different audiences. And and so I would say, look. We haven’t had any grand ambitions.

We’re we’re we’re not trying to be the next L’Oreal or Estee Lauder. Like, that’s not our our our strategy is primarily on capital allocation, support our strategic imperatives. Oh, we have these growing brands, our ability to invest in those brands, expand them around the world, and then and then we have a strong balance sheet. So when we do see these disruptive brands, we have a very high bar for them. We look at a lot of things.

We generally say no to everything because we don’t have the confidence it has that organic, the same growth profile that e. F. And our other brands would or doesn’t have the right profitability, we’re also very disciplined on valuation. If you look at the valuation on Rode and Notorium, they are incredibly attractive from any kind of precedent transactions. And so I would say it’s all about for us being a different kind of beauty company or different kind of company, period.

That’s our vision by building brands that disrupt norms, shape culture, and connect communities through positivity, inclusivity, and accessibility. And every one of our brands fits that vision. And when we see something that fits that vision that has very strong growth, we’re open to it, but we have we have plenty on our hands with the existing portfolio and what we can do.

Unidentified speaker: Well, we look forward to hearing more about next year when you’re back. That we’re right at time, so I’ll leave it there. And thanks, Trang. Appreciate it.

Tarang Amin, chairman and chief executive officer, e. F. Beauty Company: For having me. Appreciate it.

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