Elf Beauty bets big on rural market with Dollar General partnership
Elf CEO: partnership will help reach consumers in rural areas
Co raises annual sales and profit forecasts
Shares up 8% in premarket trading
By Ananya Mariam Rajesh
Nov 7 (Reuters) - Elf Beauty ELF.N, a maker of affordable cosmetics, is betting on rural markets and a tie-up with Dollar General to fuel its expansion as it hedges against a slowdown in the U.S. cosmetic industry where shoppers have shied away from pricey makeup.
The company raised its forecasts for annual sales and profit on Wednesday, in contrast to legacy cosmetics brands like Estee Lauder and L'Oreal OREP.PA that have been facing weak demand.
Shares in Oakland, California-based Elf rose 10% in pre-market trading on Thursday. The high-flying stock has taken a hit in recent months as its sales growth eases off record levels.
The company said the partnership with Dollar General DG.N would allow it to sell cosmetics such as lip oil and liquid blush at some of the retailer's stores.
Elf - short for eyes, lips and face - sells its products, some as low as $2, at U.S. retailers including Walmart WMT.N, Ulta Beauty ULTA.O and Target TGT.N.
With Dollar General,Elf is trying to find a bigger foothold with lower-income customers. The dollar store largely serves families with an annual income less than $35,000, according to the company, and has its largest concentration of stores in suburban Texas, Georgia and North Carolina.
Dollar General currently offers L'Oreal's OREP.PA Maybelline and Coty's COTY.N CoverGirl products.
"Our mission is to make the best of beauty accessible to every eye, lipand face and the accessibility is quite important to U.S. Dollar General's stated strategy of serving the underserved fits perfectly," CEO Tarang Amin said on Wednesday.
"If you think about 80% of their stores are in rural areas with less than 20,000 consumers. Previously, those consumers only had access to some of the legacy mass brands."
Elf did not say how many Dollar General stores would stock its products but added that it would take a call on expansion based on the initial feedback.
Global cosmetics giants L'Oreal and Estee Lauder EL.Nhave been facing an uphill battle to regain cost-conscious customers. While Maybelline's Washable Mascara sells for $10.50 on Dollar General's website, Elf's Lash it Loud Mascara is priced at $6, according to its own website.
The partnership with Dollar General is a "good symbiotic relationship," said Brian Mulberry, client portfolio manager at Zacks Investment Management, which owns a stake in Elf.
For the cosmetic maker, it offers an entry into an untapped market and for Dollar General it could mean more foot traffic because of the positive reputation of Elf's products, he said.
Dollar General has been battling stiff competition and has come under pressure from deep-pocketed rivals including Walmart that have doubled down on low-priced daily essentials and from the rise of China's Temu.
Elf started in 2004 by selling affordable dupes of products from Charlotte Tilbury and Dior. But it has since sought to move away from that image, introducing products that it developed itself such as Halo Liquid Filter and Glow Reviver Lip Oil.
Its stock took off after the pandemic, surging nearly four-fold from 2023to hit a peak in March. Since then, however, it has more than halved to $104.16.
Last year, the company overtook Revlon to be ranked No. 6 in the mass color cosmetics category in the U.S., according to data firm Euromonitor.
The company, which sells its products in 14 countries, recently forayed into Germany and is re-entering Mexico through premium beauty retailer Sephora.
Elf Beauty has steadily gained market share in color cosmetics category https://reut.rs/4eiJc0n
Elf's sales growth outperforms Estee Lauder and L'Oréal https://reut.rs/4hCB5P2
Reporting by Ananya Mariam Rajesh in Bengaluru; Editing by Sayantani Ghosh and Saumyadeb Chakrabarty
Aset Terkait
Berita Terbaru
Pengungkapan: Entitas XM Group menyediakan layanan khusus eksekusi dan akses ke Fasilitas Trading Online kami, yang memungkinkan Anda untuk melihat dan/atau menggunakan konten yang tersedia pada atau melalui situs, yang tidak untuk mengubah atau memperluas, serta tidak mengubah atau memperluas hal tersebut. Akses dan penggunaan ini selalu sesuai dengan: (i) Syarat dan Ketentuan; (ii) Peringatan Risiko; dan (iii) Pengungkapan Penuh. Oleh karena itu, konten disediakan hanya sebagai informasi umum. Anda juga harus ketahui bahwa konten Fasilitas Trading Online kami bukan sebagai ajakan atau tawaran untuk untuk melakukan transaksi apa pun di pasar finansial. Trading di pasar finansial mana pun melibatkan tingkat risiko yang signifikan pada modal Anda.
Semua materi yang diterbitkan di Fasilitas Trading Online kami hanya untuk tujuan edukasi/informasi dan tidak boleh mengandung nasihat dan rekomendasi finansial, pajak investasi atau trading, catatan harga trading kami, penawaran, permintaan, transaksi dalam instrumen finansial apa pun atau promo finansial untuk Anda yang tidak diminta.
Konten pihak ketiga apa pun, serta konten yang disiapkan oleh XM, seperti opini, berita, riset, analisis, harga, informasi lain atau link ke situs pihak ketiga yang tersedia "sebagaimana adanya", sebagai komentar pasar umum dan bukan menjadi nasihat investasi. Sejauh konten apa pun ditafsirkan sebagai penelitian investasi, Anda harus memperhatikan dan menerima bahwa konten tersebut tidak dimaksudkan dan belum disiapkan sesuai dengan persyaratan hukum yang dirancang untuk mempromosikan kemandirian riset investasi dan dengan demikian akan dianggap sebagai komunikasi pemasaran di bawah hukum dan peraturan yang relevan. Mohon dipastikan bahwa Anda telah membaca dan memahami Notifikasi pada Riset Investasi Non-Independen dan Peringatan Risiko kami mengenai informasi di atas, yang dapat diakses disini.
