e.l.f. Beauty To Shutter Retail Stores

e.l.f. Beauty said it will shutter its 22 company-owned stores. The announcement came as the firm released its year-end financials.
 
The move will “enable a reallocation of investment against the e.l.f. brand and prioritization of national retailer and digital channels,” according to a statement from the company.
 
“2018 was a challenging year with net sales of $267 million, down one percent from last year, driven by headwinds in tracked channels. Despite this, we improved our overall margin profile and delivered strong operating cash flow,” said Tarang Amin, e.l.f.’s chairman and CEO. “We also made significant progress on initiatives that we believe will better position e.l.f. in the rapidly evolving mass beauty landscape. Going forward, we will be laser-focused on reasserting e.l.f.’s core advantage to delight beauty enthusiasts with prestige-quality cosmetics and skin care at an extraordinary value. We intend to do this by driving demand in our brand, focusing on key, first-to-mass products, getting the right assortment and placement on-shelf and on-line and generating the cost savings to help pay for these investments.”
 
e.l.f.  said the drop was primarily driven by declining trends at select national retailers and a $4.9 million decrease in sales to discount channel customers. These impacts were mostly offset by increases in shelf space and distribution in new accounts.

e.l.f.'s retail stores contributed 5% of net sales in 2018.
 
The company currently expects to incur one-time accounting charges associated with the closing of approximately $23 to $25.0 million in total, which will be recorded in the transition period ended March 31, 2019.
 
e.l.f. Beauty also announced that John Bailey, president and CFO will be stepping down from his role at the company effective March 31, 2019. e.l.f. is working with a national search firm to hire a new CFO and said that Bailey’s responsibilities as president will be absorbed by Amin and members of the executive team.
 
“John has been a terrific strategic partner to me and the entire executive team from inception through the IPO and to this stage in the company’s journey. I thank him for his service and wish him the very best as he returns to the investment world,” said Amin.

“While it is a bittersweet decision to be leaving e.l.f., as the brand transitions, I am comforted by the strong talent that exists in and continues to be added to the Company,” noted Bailey.