Shares of low-price cosmetics company e.l.f. Beauty on Thursday soared 56% from its initial opening price on the New York Stock Exchange. Its Wednesday IPO of 8.3 million shares was priced at $17 per share, above its target of $14 to $16, according to a press release.
Twelve-year-old e.l.f. (an acronym for "eyes, lips, face") has made a name for itself selling low-priced beauty goods at department stores and specialty retailers, rather than just at drugstores. The company sells through its own site and at 19,000 U.S. stores, according to the Wall Street Journal.
In addition, e.l.f. operates nine of its own retail stores in the New York area and two in Los Angeles and plans more brick-and-mortar sites in high-traffic locations across the country, an expansion made possible by its $114 million IPO proceeds, Fortune reports.
E.l.f.'s stellar IPO this week showed Silicon Valley that sometimes retail fundamentals are better than fancy technological disruption. The company has been a hit with Hispanic women and millennials thanks to low-priced cosmetics at stores where they like to shop; CEO Tarang Amin told Fortune it was always aiming for a diverse clientele, albeit a cost-conscious one.
It also helps that much of the e.l.f. staff comes from its target demographics: Amin told Fox Business that 80% of its workforce is female, and 70% are millennials.
While now valued at more than $1 billion, e.l.f. still enjoys plenty of room to grow, and could continue to take market share from brands at both ends of the price spectrum, as long as it can continue to deliver an upscale, trend-conscious cachet at those bottom-end prices.
E.l.f.'s success also underscores the continued strength of the cosmetics sector. Last month, Ulta Salon Cosmetics & Fragrance reported its seventh straight quarter of double digit sales growth: Second quarter same-store sales rose 14.4% compared to a 10.1% spike in the year-ago quarter, with e-commerce sales increasing 54.9%. J.C. Penney's shop-in-shop collaboration with cosmetics chain Sephora is also credited as a key factor in Penney's ongoing revitalization.