E.L.F. Accelerates Growth Strategy with Naturium Acquisition.

In a significant move towards expanding its presence in the beauty industry, E.l.f. has announced its intention to acquire indie skincare brand Naturium. The deal, valued at $355 million in cash and stock, underscores E.l.f.'s ambitions to emerge as a prominent beauty conglomerate. Naturium, founded in 2019 by beauty brand incubator The Center and influencer Susan Yara, has swiftly gained recognition for its "high-performance" skincare products, emphasizing ingredients and product efficacy. Notably, its Vitamin C Complex Serum has become a bestseller, garnering an impressive 7.8 million views on TikTok.

Tarang Amin, Chairman and Chief Executive of E.l.f. Beauty, expressed enthusiasm about the acquisition, citing Naturium's rapid growth of 80 percent CAGR over the past two years. Amin drew parallels between Naturium's trajectory and E.l.f.'s initial stages a decade ago, highlighting their shared characteristics of limited distribution, strong retail partnerships, and standout products.

E.l.f.'s momentum in the beauty industry was further highlighted by its recent 18th consecutive quarter of sales growth and an upward revision of its fiscal sales outlook. Naturium, with projected net sales of $90 million and adjusted earnings of $17 million in 2023, will maintain its Los Angeles-based team, led by Susan Yara, post-acquisition. Amin also revealed plans to expand Naturium's workforce in the coming months.

By acquiring Naturium, E.l.f. is doubling down on its commitment to skincare, which will now constitute 18 percent of its sales portfolio. The move underscores E.l.f.'s strategic shift that began in 2015 when it entered the skincare market. Last year, the company introduced E.l.f. Skin as its fourth portfolio brand, targeting its makeup-loving customer base with skincare offerings. Just as E.l.f. capitalized on its previous acquisition of W3ll People to overhaul its core makeup range with cleaner formulations, insights from Naturium's skincare line will be integrated across E.l.f.'s business operations.

E.l.f.'s transformation from a digital disruptor to a multi-brand conglomerate is evident in its acquisition strategy. Prior to the Naturium deal, E.l.f.'s first acquisition occurred in 2020 when it purchased clean beauty brand W3ll People for $27 million. The company also ventured into in-house brand incubation with Keys Soulcare, a collaboration with musician Alicia Keys. This diversification into multi-brand operations has been closely aligned with E.l.f.'s commitment to strong retail partnerships and its own e-commerce platforms.

While W3ll People and Keys Soulcare tapped into mass-market appeal through partnerships with Target and Ulta Beauty, Naturium enters the premium beauty domain. The brand's presence in the UK's high-end beauty retailer Space NK exemplifies its premium positioning. The acquisition enhances E.l.f.'s overall portfolio by elevating its average price point to $18, up from E.l.f.'s typical $9 range.

Amin noted the complementary strengths between E.l.f. and Naturium. E.l.f.'s expertise in marketing and technology can amplify Naturium's existing awareness and customer engagement efforts. Moreover, Amin expressed openness to additional acquisitions in the future, further highlighting E.l.f.'s strategic expansion plans.

The Naturium acquisition stands as a triumph for Susan Yara, an influencer who successfully transitioned her brand into the hands of a strategic acquirer. Amid a landscape brimming with influencer-led beauty brands and incubators, such successes remain relatively rare. Yara's journey began with The Center, the beauty brand incubator founded by Ben Bennett, and blossomed into the thriving Naturium brand.

In conclusion, E.l.f.'s acquisition of Naturium marks a significant step in its evolution as a formidable beauty conglomerate. The move expands E.l.f.'s presence in skincare, harnessing Naturium's growth trajectory and premium positioning. This strategic alignment not only strengthens E.l.f.'s portfolio but also underscores the brand's commitment to innovative growth and capturing untapped opportunities in the beauty industry.