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Thursday, April 18, 2024

Elf Acquires Naturium for $355M

Cosmetics manufacturer Elf Beauty Inc. has agreed to acquire the drugstore skincare brand Naturium for $355 million in a combination of cash and stock. This acquisition is anticipated to double Elf’s share of retail skincare sales to approximately 18%, as stated in a press release.

“Elf SKIN is one of the fastest-growing skincare brands, and Naturium joining Elf Beauty presents a unique opportunity to significantly accelerate the potential we see in skincare,” commented Tarang Amin, Elf Beauty’s Chairman and CEO.

Elf Beauty and similar mass-market brands have thrived as consumers resume spending on makeup in the post-pandemic period while remaining value-conscious due to high inflation.

Elf Beauty reported a 76% increase in sales in the most recent quarter, reaching $216.3 million. For its current fiscal year, Elf forecasts net sales in the range of $792 million to $802 million.

Elf Beauty’s shares have more than doubled this year, closing at $122.63 in New York trading, resulting in a market valuation of approximately $6.7 billion. The company, known as Elf for “eye, lip, and face,” combines low prices (most items are priced at $6 or less) with a commitment to clean, vegan products that are cruelty-free and not tested on animals, attracting Gen Z consumers.

Following the closure of its own stores in 2019, Elf has targeted expansion in retailers like Walmart Inc. and Ulta Beauty Inc.

Naturium also emphasizes “cruelty-free” products that are free from parabens, gluten, or synthetic fragrances. Elf expects Naturium to contribute around $48 million in net sales, approximately $9 million in adjusted earnings before interest, taxes, depreciation, and amortization, and roughly $0.04 in adjusted EPS on a fully diluted basis in fiscal 2024.

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