e.l.f. SKIN - Holy Hydration! Set

E.l.f Beauty carves out skin care as fourth portfolio brand

Elf Beauty is formalizing its focus on skin care with plans to carve out its skin-care products from Elf Cosmetics.

Elf Cosmetics initially launched skin care in 2015, and it has grown to make up a “healthy” portion of the brand’s sales, said Gayitri Budhraja, head of brand at Elf Beauty. Elf Skin, set to be announced Tuesday night, will include existing products like a cleansing balm, moisturizers and acne products, all selling for $25 or less at Elf Beauty’s current retail partners. As a standalone brand, Elf Skin will receive additional marketing investment, dedicated space on ElfCosmetics.com and increased social posts on skin care. There are no plans for separate social channels, said Budhraja.

“The truth is that Elf Skin has been widged under color. [E.l.f Skin] may not be something that consumers perceive, but part of making this shift is changing our mindsets inside the organization,” Budhraja said. “The mindsets around color and skin care are fundamentally different. Color is driven by trend and inspiration, and skin care is driven by efficacy and education.”

By carving out Elf Skin, Elf Beauty is able to further expand its portfolio with four brands and set it up for even further growth. Elf Beauty acquired clean skin-care company W3ll People in Feb. 2020. Since then, W3ll People’s dermatologist co-founder Dr. Renee Snyder has contributed to clean reformulation and product development across the business. Elf Beauty then launched Keys Soulcare in Sept. 2020 with singer-songwriter Alicia Keys.

“With our acquisition of W3ll People, the launch of Keys Soulcare and the unveiling of Elf Skin, we have built a portfolio of distinct, yet complementary brands,” said Tarang Amin, CEO of Elf Beauty, during the fourth-quarter and year- end earnings call in May. “Looking ahead, we see potential to add fast-growing brands to our portfolio, to expand our capabilities into adjacent categories or different consumer segments, while leveraging our multiple areas of advantage.”

Such an expansion would come off the successful long-term turnaround strategy begun in 2019 to improve the company’s sales and growth. Key strategies included closing its standalone stores and increasing focus on mass retail distribution. Since then, Elf Cosmetics bucked the industry trend of declining cosmetic sales with 13 consecutive quarters of net sales growth. For fiscal year 2022, its net sales increased 23% year-over-year to $392 million, and the company projects net sales to grow 10-12% in fiscal 2023.

Beginning in late June, Elf Skin will kick off its first dedicated digital campaign in order to inform existing customers of its offerings, as well as drive new consumer acquisitions.

“[Skin care] is not a trade-off. We are not taking our eye off of what we’re doing from a color perspective,” said Budhraja.