The business of beauty
Pretty profits at ELF
Good morning, beauty buffs. This is your Stock Market Rundown for May 30th, 2024. Thanks for joining me once again. Let’s dig in:
TODAY’S TOP STORY: GLOSSY GAINS
A decade ago, YouTube influencers ruled the beauty industry with a manicured fist. As the ruling gurus of glam, they taught their fans to wear caterpillar-like fake eyelashes and Bozo the Clown lip liner. (A bit much for a trip to the grocery store.)
These days, contouring is out and the “clean girl” aesthetic is in. Of course, cosmetics companies aren’t big fans of the natural look. How can they sell consumers a palette of eighteen different eyeshadow shades, when everybody wants to look fresh-scrubbed?
One make-up vendor that’s thriving in the TikTok era is ELF. The California-based cosmetics company—whose name stands for “eyes, lips, face”—has stolen market share from longtime industry leaders like L’Oreal and Maybelline. That’s helped them rack up twenty consecutive quarters of net sales growth.
How does ELF win? Number one, velocity—the company brings new products to market in under 20 weeks. So, it can ship trend-following items to its fickle customers—fast.
Number two, extreme value: its average price point is $6.50, versus prestige brands costing three to four times as much. That’s made ELF the favourite brand of teens spending their babysitting money at CVS.
Thanks to eager customers’ purchases of its mascara, concealer, and lip gloss, ELF just reported sales for the last fiscal year that surpassed $1 billion for the first time ever. At this rate, the only thing that could improve ELF’s prospects is if sparkly blue eyeshadow comes back in style.
SO WHAT ELSE IS GOING ON?
China is encouraging companies to pay more dividends to lure overseas investors. Will US retirees trade in their Disney and Coca-Cola for Tencent and PinDuoDuo?
Turns out even billionaires have a salary cap. A major proxy firm is encouraging Tesla shareholders to reject a $56 billion pay package for CEO Elon Musk. Can’t blame them, considering Tesla’s stock price has been cut in half from all-time highs.
The company that makes Timberland boots, VF Corp, reported a quarterly loss and missed estimates, which led to the stock getting a shitkicking.
PepsiCo plans to deliver its products in California with electric vehicles. Apparently, PepsiCo doesn’t want to pollute the earth with emissions… they just want to pollute our digestive tracts with Doritos and Mountain Dew.
And that's a wrap on today, friends. Make sure to tune in tomorrow morning. Yours in capitalism, The Axe
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