The shares of ELF, Coty, and Inter Parfums continue to swiftly show gains across the market, while health and personal care lead latest retail numbers.
Beauty stocks of well positioned brands continue to soar, as they prove to appeal to consumers who continue spending on skincare, makeup, and personal care items despite inflation.
The low-budget cosmetics brand e.l.f. Beauty (ELF) shares have soared more than by 80% year-to-date, closing at $105.15 on Sept. 22. Inter Parfums, Inc. (IPAR) have seen gains of 57.4%, closing at $135.90. While Coty Inc. (COTY) saw a surge of 36% in the same period, closing at $11.79.
Meanwhile, the S&P 500 is up more than 12% year-to-date.
With the rising cost of living and inflation, consumers have tightened their wallets by switching their spending from luxury to budget-friendly goods. e.l.f. Beauty has carved out their own niche in the market due to this. But even established beauty companies like Coty and Inter Parfums are embracing resilient consumer behavior to stay afloat and attract customers to their more expensive goods.
In August, health and personal care stores increased 0.5% month over month seasonally adjusted and 7.8% year over year unadjusted, according to the National Retail Federation (NRF).
“The big thing in retail is that in the last few years it’s been at a lot of inflationary levels, but yet consumers are buying and paying for that,” said Sucharita Kodali, retail industry analyst at Forrester Research. “Consumers are absorbing the price increases in categories like consumables, which are high levels of spending on consumer goods.”
The brand reported a more than 76% market share gain of 260 basis points during its first quarter of 2024, which ended in June 2023.
“This marks our 18th consecutive quarter of delivering both net sales growth and market share gains. We are one of only five publicly traded consumer companies out of 274 that have grown for 18 straight quarters and averaged at least 20% sales growth per quarter over that period,” said Tarang Amin, e.l.f. Beauty’s chairman and chief executive officer during the company’s first quarter earnings call.
e.l.f. Beauty, short for eyes, lips, and face, continues to dominate the market after it positioned itself in the beauty-verse thanks to its luxury label dupes and popularity in trending beauty channels on TikTok.
“Beauty space is definitely impacted by influencers”, said Kodali.
In the last week of August, e.l.f. Beauty shares experienced a 150% surge after the announcement of a definitive agreement to acquire Naturium, a renowned brand known for its science-backed clean skincare and body care products, in a staggering $355 million deal – in a combination of cash and stock. Naturium joins e.l.f. Beauty brands: e.l.f Cosmetics, e.l.f Skin, Keys Soulcare, and Well People.
According to notes from Morgan Stanley analysts, the purchase will double e.l.f.’s current skin care sales, from 9% to 18%. This will build on the company’s early success in skin care and its strong growth in mass makeup over the past few years. However, they are keeping a watch on various risks, such as sourcing from China in terms of cost volatility or supply chain disruptions due to tariffs, as well as the overall impact of COVID-19 on the beauty category.
On the other hand, the New York-based beauty conglomerate Coty, is starting to see a turnaround in gains post-pandemic. Most recently by strategically relaunching brands like CoverGirl to appeal to consumers outside of their premium products and to harnessed the power of social media influencers and natural advocacy as evidenced by the viral success of launches on TikTok, according to its results for the fourth quarter of fiscal year 2023, that ended June 30, 2023. The company owns luxury brands like Adidas, Tiffany & Co., Vera Wang, Kylie Cosmetics and Gucci.
Inter Parfums shares continue to rise, fueled by strong consumer demand for fragrances and the company’s strategic focus on introducing new products and securing licensing agreements with prestigious brands.
“IPAR is seeing no weakening anywhere in the world, and the fragrance segment continues to be the star of the global prestige beauty market”, according to a report shared by Linda Bolton Weiser, managing director, senior research analyst at D.A. Davidson.
However, not all brands are drawing positively the consumers attention. The leading manufacturer of cosmetics Estée Lauder Companies Inc. and the mass cosmetics seller Ulta Beauty Inc. shares dropped by 45% and 17% year to date.
Estée Lauder, experienced decreases in revenue, after an impact in sales coming from China. Ulta saw a decrease in profits, according to its second quarter earnings report, due to lower merchandise margin, higher inventory shrink, and higher supply chain costs.
Tumbling as well is Sally Beauty Holdings, Inc. (SBH) with a 36% decline in shares. In 2022, Sally Beauty announced the closing of more than 350 Sally Beauty Supply 350 stores to readjust operations earnings. Most recently the company unveiled its Bondbar’s hair repair system in hopes to bring in revenue and compete with market hair bonding pricier sister, Olaplex.