Economy
12 March
This Week in Commerce: Inflation, retail sales & Honest Co. earnings
Check out the calendar for March 13-17.
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Welcome to a new week. The run-up to St. Patrick’s Day will be a busy week of economic data, with the latest look at inflation and retail sales providing a snapshot of the consumer. On the networking front, marketplace sellers are gathering in Las Vegas for Prosper Show. You’ll see plenty of well wishes about luck this week. But as you consider where that fits into your working life, remember this from the Roman philosopher Seneca: Luck is what happens when preparation meets opportunity.
Let’s take a look at the calendar:
Events
Prosper Show: The Las Vegas conference for marketplace sellers features networking, connections to service providers and advanced education. (March 13-15)
Economic indicators
Consumer Price Index: The U.S. Bureau of Labor Statistics releases data on inflation across the economy for February 2023. While inflation had cooled in the latter months of 2023, that motion slowed in January to leave the year-over-year price increase at 6.4%. (March 14, 8:30 a.m.)
U.S. retail sales: The U.S. Commerce Department releases data for retail sales, including ecommerce, for February 2023. In January, total sales saw a bump up 3% for the month to start the year strong, despite talk of consumer pullback. (March 14)
Producer Price Index: The U.S. Commerce Department releases data for pricing paid by wholesalers for goods before they reach retail sales. This is seen as a forward-looking measure of inflation. (March 14, 8:30 a.m.)
Consumer Sentiment: The University of Michigan releases preliminary data for March on consumer buying conditions expectations, including the outlook on inflation. Sentiment ticked up slightly in February, showing signs of emergence from historic lows over the summer. (March 17, 10 a.m.)
Earnings
Monday, March 13: Boxed
Tuesday: March 14: Lulu’s Fashion Lounge, Guess
Thursday, March 16: Honest Company, Blue Apron, G-III Apparel, Designer Brands, FedEx
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Marketing
26 May
e.l.f. Beauty grew quarterly digital sales 75%. Here are the drivers
Upping marketing spend, growing loyalty members and multichannel sales are key to the beauty brand's strategy.
Photo by Andrea Castro on Unsplash
Digital commerce is helping e.l.f. Beauty pour fuel on the fire.
The brand continues to be one of the shining examples of the staying power of beauty products despite consumer pullback in other areas of discretionary spend. e.l.f. grew net sales 48% in the fiscal year ended March 31 as it reached $500 million in sales for the first time. For the most recent quarter, sales grew by a whopping 78%. The company is seeing profit gains as well, as adjusted EBITDA grew 56%.
With the top-line revenue flowing, the brand was opportunistic about how it invested in marketing in the most recent quarter. After upping spend to 33% of net sales in the quarter, the company ended up with marketing and digital investment at 22% of net sales for the year. That was well above the higher end of its 17% to 19% outlook. In the coming year, it expects 22% to 24%.
The fact that digital and marketing fall in the same category reflects the brand’s approach to marketing. It's a favorite among Gen Z, and has found a home on the social apps that are popular with the generation.
“Our disruptive digital-first marketing engine has built strength across multiple social platforms,” CEO Tarang Amin told analysts on the company’s earnings call. “We are a pioneer on TikTok and are now a four-time TikTok billionaire with our last hashtag challenge garnering nearly 15 billion views. We were the first major beauty company to launch a branded channel on Twitch and the first beauty brand on BeReal.”
As a sales category, digital penetration is now 17%, growing from 14% last year. The channel grew 75% in the most recent quarter.
Amin laid out three factors driving this trend:
Marketing. The marketing investment that e.l.f. made brought strong returns, and the digital-first nature of those ads are bringing people to the brand’s digital sales channels.
Loyalty. E.l.f.’s Beauty Squad loyalty program has 3.7 million members, which is a 25% year-over-year increase. Loyalty members are the biggest driver of the brand’s digital business, accounting for over 80% of sales on the brand’s DTC site.
Multichannel. e.l.f. is the only one of the top five mass cosmetics brands that has a DTC site, Amin said. It is also seeing strong growth at Amazon and other retailer ecommerce websites. The growing presence is “building upon itself,” Amin said.
With digital growth, the brand is seeking to expand capacity in the supply chain that will provide more efficiency and faster delivery, as well. It is shifting to a more distributed ecommerce fulfillment model. Previously, it had one automated warehouse in Columbus, Ohio, which meant shipping to the West Coast could take time. Now, it is moving to a multinode distribution network. With the first couple nodes up and running, there is already improvement in delivery times.
The brand is also adding distribution capacity to its main warehouse in Ontario, California.
As marketing helps more people discover and buy from the brand, the operational improvements will help create a customer experience that lives up to the hype.
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