e.l.f. Beauty announced results for full fiscal year 2020 ended 31st March, 2020, saying it was a “terrific year.”
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“Fiscal 2020 was a terrific year for e.l.f. Beauty. We saw four quarters of net sales growth, culminating in a 16% increase in the fourth quarter versus prior year. We also expanded gross margin 300-basis points, compared to the prior year. Of the top five color cosmetics brands in the U.S., e.l.f. Cosmetics grew the most market share in fiscal 2020 with 4.8% of the market, up 50 basis points, according to Nielsen,” said Tarang Amin, e.l.f. Beauty’s Chairman and CEO.
“Given our fiscal 2020 results and execution of our five strategic imperatives, we believe we are well positioned relative to the category to navigate the challenges posed by COVID-19. Our mission to make the best of beauty accessible to every eye, lip and face is more important than ever. While the current environment is challenging, we believe our talented team, digital strength and core value proposition will enable us to continue to gain market share,” continued Tarang.
Full year, ended 31st March, 2020 results showed net sales increased 6%, or $15.2 million, to $282.9 million, as compared to $267.7 million in fiscal 2019. The increase was primarily driven by increased productivity across retail and e-commerce channels, partially offset by the closing of all 22 e.l.f. retail stores in February 2019. Fiscal 2019 included $12.0 million in net sales related to e.l.f. retail stores. Excluding the contribution from e.l.f. retail stores, net sales increased 11% as compared to fiscal 2019.
Gross margin increased to 64% from 61% when compared to fiscal 2019, with benefits primarily from margin accretive innovation, cost savings, price increases, favorable movements in foreign exchange rates and an increase in inventory reserves in the prior year, partially offset by higher sales adjustments and the impact of tariffs on goods imported from China.
Selling, general and administrative expenses was $157.2 million, or 56% of net sales, compared to $137.7 million, or 51% of net sales in fiscal 2019. Adjusted SG&A was $139.3 million, or 49% of net sales, compared to $120.3 million, or 45% of net sales in fiscal 2019. The increase was primarily due to investments in marketing and digital expenses, bonus accrual, investment in merchandising programs, and increased depreciation expenses driven by customer fixture programs. These increases were partially offset by the closure of e.l.f retail stores.
The provision for income taxes increased from a benefit of $1.3 million, or an effective tax rate of 29%, for the twelve months ended March 31, 2019 to expense of $6.2 million, or an effective tax rate of 26%, for the twelve months ended March 31, 2020. The change in the provision for income taxes was primarily driven by an increase in income before taxes of $28.4 million and a decrease in one-time tax benefits of $1.0 million, primarily related to the company’s provision-to-return adjustment for the period ending 31st December, 2017, which was recorded during fiscal 2019.
On a GAAP basis, net income was $17.9 million, or $0.35 per diluted share, based on a weighted-average diluted share count of 50.8 million shares. This compares to net loss of $3.1 million, or $0.06 per diluted share, based on a weighted-average diluted share count of 49.3 million shares in fiscal 2019.
Adjusted EBITDA slightly increased to $62.6 million from $62.4 million in fiscal 2019.
Adjusted net income was $32.2 million, or $0.63 per diluted share, based on a weighted-average diluted share count of 50.8 million shares. This compares to adjusted net income of $32.7 million, or $0.66 per diluted share, based on a weighted-average diluted share count of 49.3 million in fiscal 2019.