The brand’s CEO talks about winning over Gen Z, Jennifer Coolidge’s Super Bowl ad and closing all its stores.
(Bloomberg) — Elf Beauty Inc. has been around for almost two decades, but is just now having a coming-out party of sorts.
The company aired its first Super Bowl ad earlier this month with a spot starring actress Jennifer Coolidge (of White Lotus and American Pie fame). The brand also boosted sales about 50% last quarter from a year earlier with what it has called a “mission to make luxurious beauty accessible.”
Elf, which stands for eye, lip and face, has paired its low prices (most items are about $6 or less) with a pledge that its products are clean (meaning no chemicals such as phthalates) and vegan without animal testing. That’s helped the brand win over Gen Z, a cohort whose oldest members are in their mid 20s.
The company went public in 2017 and sales growth slowed for a couple of years before surging during the pandemic when a lot of makeup brands experienced declining demand as people spent more time at home. Analysts expect sales to reach about $620 million in the fiscal year beginning in April 2023, which would mean nearly doubling revenue from three years earlier.
Bloomberg recently spoke to Chief Executive Officer Tarang Amin about the brand’s origins, what’s driving growth and how it plans to keep an edge over its competitors.
You joined the company as CEO in 2014 after private equity firm TPG bought a majority stake. Did you ever hear the origin story?
All the way back to the founders’ story — 19 years ago they were selling cosmetics over the internet for a dollar. People thought they were crazy. This is pre-iPhone. People didn’t think you could sell cosmetics over the internet, and you certainly couldn’t sell them for a dollar and make money.
But they had this crazy, disruptive idea. We since migrated into different price points, different channels, but that core value proposition has been with us from almost day one.
Before joining Elf, you and TPG built up Schiff Nutrition and eventually sold the company in a deal valued at about $1.4 billion. What about Elf interested you?
We knew that some of the largest [strategic acquirers] were very much interested in Elf. They loved everything we loved — this appeal to a more diverse, younger user base.
It was a company in 2014 that was perfect for private equity because none of the core infrastructure had been built yet.
At one point, the company operated physical retail locations, but shuttered them in 2019. Why?
We had 27 of our own boutiques. As good as those stores were, many of them are in malls — places we weren’t gonna be able to change traffic patterns. So we shut them all down on the same day.
Aside from your e-commerce platform, where else do you have to grow in terms of retail partnerships?
The rest of our business is through large national retailers. Our top three customers are Target, Walmart and Ulta Beauty in the US.
We’re in the right mass retailers in the US, but we have this opportunity of picking up more space, and retailers have been rewarding us with more space.
Marketing is crucial in beauty because there’s so much competition. Brands like Morphe built fast-growing businesses late last decade around collaborations with influencers. Elf shied away from that. Why?
When I first saw a lot of that influencer wave, including Kylie [Cosmetics] and Fenty [Beauty from singer Rihanna] and what they were doing, I thought our value equation would insulate us from that. And then what I found was that wasn’t the case at all.
We had a great message, but it was getting lost in all the noise. And we feel like that was a more fundamental strategy to kind of build the brand long term. We also avoided a lot of the celebrity pieces of just borrowing someone’s name, paying them a big cash thing and creating a brand.
Elf had never done advertising on broadcast TV and then does the Super Bowl. Why?
The objective of the campaign is to broaden awareness of the brand by combining high-visibility placements during a key cultural moment.
Editor’s note: This interview has been edited and condensed.
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