e.l.f. Beauty has announced results for the three-month transition period ended March 31, 2019. Net sales increased $0.2 million in the first calendar quarter of 2019, to $66.1 million, primarily due to increases in shelf space at existing retailers, distribution into new accounts and lower sales adjustments, according to the company, and partially offset by the timing of pipeline shipments and the closing of all 22 e.l.f. retail stores in February 2019.
On a GAAP basis, net loss was $17.9 million, or $0.37 per share, based on a weighted-average share count of 48.0 million shares. The net loss in the Transition Period includes $22.2 million in restructuring expenses related to the closing of all 22 e.l.f. retail stores in February 2019. Adjusted EBITDA increased 1% to $12.0 million from $11.9 million in the first calendar quarter of 2018.
e.l.f. anticipates a "flat and highly competitive" mass color makeup sector and a lag in benefits from its marketing and digital boosts. When compared to net sales in fiscal 2019 excluding the contribution of e.l.f. stores, the fiscal 2020 outlook reflects an expected 4-8% decline in net sales.
China tariffs reportedly impacted gross margin, which remained flat as of 61%.
Gross margin was 61%, flat when compared to the first calendar quarter of 2018, in part due to the impact of tariffs on goods imported from China.
“Our transition period results exceeded our expectations with net sales of $66 million, which is an increase of 3% after excluding the impact of e.l.f. stores," says Tarang Amin, CEO. "These results were driven by Project Unicorn and increased marketing activations behind our new first-to-mass products."
Amin added, "We are pleased with the initial progress on our growth initiatives and by improvements in tracked channel performance. We recognize that it will take time to fully implement our strategic repositioning, and therefore, we remain cautious as we enter fiscal 2020.”