Dive Brief:
- Stepping further into skin care, E.l.f. Beauty has entered into an agreement to acquire Naturium for $355 million in a combination of cash and stock, according to a Tuesday press release.
- The deal is expected to double E.l.f. Beauty’s skin care presence to about 18% of retail sales, per the release. The transaction is subject to closing conditions and expected to be completed around Sept 30.
- Naturium anticipates generating about $90 million in net sales this year, contributing about $48 million to E.l.f. Beauty’s fiscal 2024 given that the transaction will finalize halfway through the fiscal period. Naturium is expected to continue operating from its headquarters in Los Angeles and will maintain its team.
Dive Insight:
Launched in 2019 by brand accelerator The Center — which also houses brands including Saltair and Phlur — Naturium’s focus on effective and affordable skin care matches E.l.f. Beauty’s mission. While E.l.f. Beauty operates a namesake skin care brand, the company noted that Naturium sells at a higher price point, attracts a somewhat older consumer and has more male customers.
“We’ve built an incredible brand, with numerous superstar formulas, a dedicated community and a world class team in less than four years,” Susan Yara, who joined as Naturium’s founder in 2020, said in a statement. “With our complementary missions and cultures, I know E.l.f. Beauty will be the ideal partner as we expand our reach, and continue to make high performance skin care accessible for all.”
E.l.f. Beauty expects to finance the $355 million transaction using available cash, borrowings under an existing credit facility and about $70 million of stock issued to founders and key management.
Naturium’s ‘masstige’ price point (at an average of $18), engaged network of skin care authorities and Yara’s strong educational public messaging were a few factors that attracted E.l.f. Beauty, per an investor presentation. E.l.f. Beauty believes it is well positioned to expand Naturium’s brand awareness.
E.l.f. Beauty also plans to expand Naturium’s retailer relationships, as the skin care brand in the U.S. is sold only via Target and Amazon outside its direct-to-consumer website, E.l.f. Beauty CEO Tarang Amin said on a conference call Tuesday.
“In terms of our plans, I'd say first, near term it’s to really maximize where Naturium already is,” Tarang said. “Certainly given the momentum that Naturium has, there are going to be other distribution opportunities for Naturium that we'll look into. We're not ready to talk about those yet but obviously, you can see the track record we've had on E.l.f. and our ability to get E.l.f. broadly distributed. ... We feel there are opportunities not only in the U.S., but also internationally.”
E.l.f. Beauty — which boasts a portfolio including E.l.f. Cosmetics, E.l.f. Skin, Well People and Keys Soulcare — started its new fiscal year on a high note, reporting in August that its first-quarter net sales increased 76% year over year to $216.3 million. Net income jumped 266% to nearly $53 million. E.l.f. Beauty raised its fiscal 2024 outlook, now expecting net sales to range from $792 million to $802 million.
