E.l.f. Cut Down To Size As US Distribution Gaps Shrink, Fans’ Eyes Wander
This article was originally published in The Rose Sheet
After recording boast-worthy sales increases of 20% and 18% in fiscal 2016 and 2017, respectively, e.l.f.’s growth is tapering off faster than anticipated. The company will counter with brand investments, better storytelling and sharper product mix in retailer doors, among other initiatives.
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A “sober” assessment of e.l.f.’s strategy and governance is “clearly warranted and long overdue,” says Marathon Partners founder and Managing Partner Mario Cibelli in a letter to the company’s board. E.l.f.’s share price has been on a steady decline as sales growth has slowed, with a roughly flat performance reported by the firm in November for the first three quarters of fiscal 2018.
Marathon Partners, which owns approximately 8.5% of e.l.f., is pushing the company to make significant strategic changes in light of declining share value since its initial public offering in 2016.
With its mission "to make luxurious beauty accessible to all," e.l.f. is on track to post 17% growth in fiscal 2017. The Oakland, Calif.-based firm expects its gains to slow going forward, but leadership remains confident in the business model, which emphasizes speed to market with on-trend innovation at value prices.