Growth powerhouse e.l.f. Beauty (ELF) continued to take market share in 2023.
A year ago, the Oakland, Calif.-based company ranked No. 5 in the US among mass cosmetics brands, according to Nielsen data. By August 2023, after 19 straight quarters of net sales growth, e.l.f rose to become the No. 3 brand, behind L'Oréal and Maybelline, with 9.5% market share.
It's rewarded investors too: Over the past year, e.l.f. Beauty stock surged 216%.
"The company is rapidly moving up the market share ranks in mass cosmetics in the US and globally," D.A. Davidson senior analyst Linda Bolton Weiser told Yahoo Finance Live (video above). "I think there's still a lot of growth left for e.l.f."
The company finished the year on a strong note, seeing a "sequential uptick" in sales in December ahead of the holidays, Canaccord Genuity analyst Susan Anderson wrote in a note. Anderson maintains a Buy rating with a $169 price target and estimated e.l.f. (short for EyesLipsFace) will post another top-line beat in its upcoming fiscal second quarter.
The brand, founded in 2004 and now known for its affordability, has benefited from a consumer shift to value, especially among Gen Z and millennial shoppers. It also gained share within key retail channels, such as Target (TGT) and Ulta Beauty (ULTA).
"I'm really bullish about the share gains that we've been able to sustain," e.l.f. CEO Tarang Amin said on an earnings call last August. "We passed both CoverGirl and Revlon for the No. 3 reposition in color cosmetics at 9.5% share. But if I look at our longest-standing national retailer, Target, we're the clear No. 1 brand there with an 18% share. So I feel over the next few years, we have an opportunity to double our market share in color cosmetics."
Amin also sees more "white space" in skin care. The company has expanded its presence in the category, announcing an agreement last fall to acquire skin care brand Naturium for $355 million.
Meanwhile, the overall category for mass cosmetics has seen momentum, even as economists have predicted a slowdown in consumer spending.
L'Oreal continues to lead the US cosmetics market, which is valued at over $87 billion. The French conglomerate showed little sign of slowing down last year, completing a $2.5 billion acquisition of Aesop to add to its portfolio.
Yet, Amin remains undeterred by the competition, saying e.l.f. Beauty is "in early innings unlocking the full potential for our brands." And many Wall Street analysts are optimistic too.
"They want to be No. 1," Bolton Weiser said.
