e.l.f. Beauty has announced the closure of its 22 e.l.f. stores, news which follows a Q4 net sales fall of 4 percent to $78.6 million, attributed to declining trends at national retailers, fall in holiday program sales and lower pipeline shipments.
The digitally native brand’s bricks and mortar stores, which contributed 5 percent of net sales in 2018, will close as the company looks to focus on digital and national retailers. According to a press release, the closures are to “enable a reallocation of investment against the e.l.f. brand and prioritization of national retailer and digital channels.”
Net income reached $9.5 million in Q4, less than half the amount of the comparable period last year, which was $21.5 million. Q4 sales reached $78.6 million compared to $81.6 million in the comparable quarter, missing Wall Street expectations of $84.5 million.
Tarang Amin, e.l.f.’s Chairman and Chief Executive Officer, said, “2018 was a challenging year with net sales of $267 million, down one percent from last year, driven by headwinds in tracked channels. Despite this, we improved our overall margin profile and delivered strong operating cash flow.
“We also made significant progress on initiatives that we believe will better position e.l.f. in the rapidly evolving mass beauty landscape. Going forward, we will be laser-focused on reasserting e.l.f.’s core advantage to delight beauty enthusiasts with prestige-quality cosmetics and skin care at an extraordinary value. We intend to do this by driving demand in our brand, focusing on key, first-to-mass products, getting the right assortment and placement on-shelf and on-line and generating the cost savings to help pay for these investments.”
In other news, e.l.f. Beauty President and CFO John Bailey will be stepping down from his role effective 31 March, 2019, with the company working with a national search firm to hire a new CFO. Bailey’s presidential responsibilities will be absorbed by Amin and his team.