Cosmetics maker Elf Beauty Inc. has agreed to acquire drugstore skincare brand Naturium for $355 million in cash and stock.
The deal is expected to double Oakland, Calif.-based Elf’s share of retail sales in skincare to about 18 percent, according to a statement
“Elf Skin is one of the fastest growing skincare brands, and Naturium joining Elf Beauty presents a unique opportunity to significantly accelerate the potential we see in skin care,” Tarang Amin, Elf Beauty’s chairman and chief executive officer, said in the statement.
Elf and other mass-market brands have done well as consumers start to spend more on makeup in the post-pandemic era but remain eager for bargains amid high inflation. The company’s sales rose 76 percent in the most recent quarter to $216.3 million. Elf is forecasting net sales of $792 million to $802 million in its current fiscal year.
Its shares have more than doubled this year. They closed Monday up 1.6 percent to $122.63 in New York trading, giving the company a market value of about $6.7 billion.
Elf, which stands for eye, lip and face, has paired its low prices — most items are about $6 or less — with a pledge that its products are clean and vegan without animal testing. That’s helped the brand win over Gen Z consumers. It has targeted expansion in retailers such as Walmart Inc. and Ulta Beauty Inc. after it closed its own stores in 2019.
Naturium also focuses on “cruelty-free” products that don’t contain paraben, gluten or synthetic fragrances. Elf expects Naturium to contribute roughly $48 million in net sales, about $9 million in adjusted earnings before interest, taxes, depreciation, and amortization, and some $0.04 in adjusted EPS on a fully diluted basis in fiscal 2024.
