After 18 consecutive quarters of growth among its brands, E.l.f. Beauty is expanding its portfolio.
The parent company of E.l.f. Cosmetics, W3ll People and Keys Soulcare has signed an agreement to acquire Naturium for $355 million, it revealed Tuesday. It’s part of a broader strategy to give the company cachet in skin, which could comprise 18 percent of retail sales after the sale is completed, which is expected to close around Sept. 30.
Naturium is sold at Target, Amazon and Naturium.com, among other partners globally. It boasts an average price of $18 per product, which include its hero body wash, vitamin C complex serum and moisturizer with SPF 50.
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The acquisition confirms an earlier WWD report that Naturium was mulling deal options. According to a statement from E.l.f. Beauty, Naturium is slated to reach $90 million in net sales this year, and the company expects Naturium to add $48 million in net sales for its fiscal 2024 year.
“We are thrilled to welcome Naturium to the E.l.f. Beauty family,” said Tarang Amin, E.l.f. Beauty’s chairman and chief executive officer, in a statement. “Nearing two decades in business, we continue to deliver exceptional results. In August, we raised our fiscal 2024 outlook after posting quarterly net sales growth of 76 percent, marking 18 consecutive quarters of more than 20 percent sales growth on average. E.l.f. Skin is one of the fastest-growing skin care brands, and Naturium joining E.l.f. Beauty presents a unique opportunity to significantly accelerate the potential we see in skin care.”
In an interview, Amin noted that Naturium would continue to operate independently in L.A. “Sometimes, you do acquisitions based on synergies, and this is very much a growth acquisition. So we plan to keep the entire Naturium team,” he said.
A Jefferies note commended the move, saying, “We favor E.l.f.’s further diversification of its portfolio,” comparing Naturium’s current distribution with that of E.l.f.’s 10 years ago. E.l.f.’s stock price closed the day at $133.63, an almost 9 percent increase.
Naturium was founded in 2019 under the Los Angeles-based brand accelerator The Center. In 2020, Susan Yara joined the brand and in 2021, The Center took an investment from Prelude Growth Partners. Aside from the 80 percent compound annual growth rate, Amin said the brand’s strategy dovetailed nicely with E.l.f. Beauty’s.
“Our strategies couldn’t be more aligned. We make the best of beauty accessible to every eye, lip, face and skin concern. They make the best of skin care accessible. The brand complements E.l.f. Skin, which has really strong momentum.”
Amin said E.l.f. is the largest cosmetics and skin care brand at Target Corp. “by a wide margin,” adding that with Naturium, “we can leverage our relationship and our strength of Target to get Naturium even greater presence within Target,” as well as Amazon.
Eventually, international expansion will also be on the docket. Naturium is sold in Space NK in the U.K. “Given how rapidly we’re expanding internationally, it’s just natural to bring another growth brand to our international retailers,” Amin said.
E.l.f. Beauty acquired W3ll People and incubated Keys Soulcare, Alicia Keys’ skin care line, in 2020. Amin didn’t rule out further acquisitions. “Even with this acquisition, our net debt to EBITDA ratio is still less than 1.5 times,” he said. “We still have plenty of capacity. If we saw another asset like Naturium, that excited us and fit our strategy well and we saw a lot of growth, we can certainly do more.”
“We’ve built an incredible brand, with numerous superstar formulas, a dedicated community and a world class team in less than four years,” said Susan Yara, Naturium’s founder, in a statement. “I have admired E.l.f., and their deep commitment to being a different kind of beauty company, for years now. They care about their community and their employees, which is truly meaningful to me, especially as a female founder. With our complementary missions and cultures, I know E.l.f. Beauty will be the ideal partner as we expand our reach, and continue to make high performance skin care accessible for all.”