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With so many events canceled and millions of employees working from home (or donning a mask when venturing out), makeup becomes a bit pointless, at least in the short term. So it’s not surprising that makeup sales dipped 22% in the first quarter, and as face masks become the new normal, it’s hard to see a major reversal anytime soon.
The opposite can be said for skin care sales, which were up 11% in the first quarter and have been on an upward trajectory since well before the pandemic struck. That could be the saving grace for many beauty-product makers that have either already made a shift in product inventory or were in motion to do so.
Fortune spoke with e.l.f. Cosmetics CEO Tarang Amin for a new series, The Coronavirus Economy, to ask about how the outbreak has affected sales and what it’s like managing a global workforce, as well as how publicly traded companies can work with small businesses to get through the economic crisis.
The following interview has been lightly edited and condensed for clarity.
Fortune: When did you realize COVID-19 would affect your business? And how has it thus far?
Amin: We’ve been dealing with COVID since January when our team in China was impacted. I still remember the concern in our general manager’s voice when she spoke of the uncertainty. We took immediate steps to make sure our employees in Shanghai were safe, and thanks to the strict health protocols and dedication of our employees and suppliers, our team has remained healthy. We were also one of the first beauty companies to be fully operational in China when COVID-19 restrictions were lifted.
In the U.S., our first priority was also the safety and wellbeing of our employees and consumer community, and we’ve taken many of the same protocols we used in China and implemented them here. We sent safety kits with gloves, hand sanitizers, and disinfectant wipes to all employees and provided assistance with other needs.
We also manufactured hand sanitizer that we’ve shared with our team and partners and are shipping for a limited time with every order on elfcosmetics.com. Our focus will always be on our community, and I’m proud of our efforts to get through this together.
In terms of impact, for the four weeks ending April 18th, the cosmetics category was down 38%, and e.l.f. was down 30% in Nielsen-tracked channels. However, we were able to grow market share, reaching 5.2% of the market, up 60 basis points versus year ago.
What kinds of trends have you observed among your customers? Has there been a significant shift toward skin care over beauty products? Could these shopping habits take root for the long term?
Yes, we are seeing a lift in skin care and a blurring of the lines between health and wellness. For example, our Holy Hydration, Cannabis Sativa, and Supers lines fueled growth in skin care with sales up 27% in fiscal year 2020. We also launched the first full-spectrum CBD line in Massachusetts this month and have seen terrific results so far.
For us, we see skin care as a strategically important category that exemplifies our ability to deliver prestige quality at great value, which is resonating with our consumers in so many different ways.
During the COVID-19 outbreak, we received notes from nurses on the front lines who let us know that e.l.f.’s Poreless Putty Primer—which is our No. 1 SKU in the face category and the bestselling primer in the U.S.—not only helped save and soothe their skin, but also worked well as it wouldn’t soil their face masks like their other color foundations. We love these types of stories and hearing from our consumers.
So, while we’ll continue to innovate across eyes, lips, and face, we’re also leaning into skin care. We recently extended our popular Putty Primer into franchises with the introduction of our Matte and Luminous Putty Primers, and plan to further our presence in the category, with a strong pipeline for this fall.
We believe that our fundamental value equation and digital engagement as well as our world-class team’s ability to adapt at e.l.f. speed positions us well to weather the COVID-19 storm better than others in the category, as we continue to gain market share.
E.l.f. Cosmetics is a publicly traded company, and it has been working with a number of smaller businesses during the downturn. Could you explain more about this collaboration, what kinds of opportunities are available to both parties, and, in general, the value proposition for large, public companies supporting small business during this economic downturn?
Last year, we rolled out a refreshed brand expression, where we redefined our marketing strategy, investing more to bring more consumers into the brand. We looked to build relationships with new partners who could help us add more strength, to go where no one has gone before. We brought in Brooklyn-based creative agency, Movers+Shakers, who had a unique superpower in bringing brands to life with original music and dance.
Together we launched the #eyeslipsface hashtag challenge on TikTok, and worked alongside Grammy Award–winning producer iLL Wayno [in partnership with Republic Records] and singer Holla FyeSixWun, to create the campaign’s original song, “Eyes. Lips. Face. (e.l.f.),” which has garnered 5.3 billion views, 3.5 million videos created, and has been deemed the most viral campaign in TikTok U.S. history.
Building off the challenge’s success, we put our heads together to raise awareness of basic preventative measures we can take to help stop the spread of COVID-19 and decided to release a remix of the original song, called “Eyes. Lips. Face. Safe”—a fun, yet important musical reminder to share basic hygiene steps, while fostering creativity to help stop the spread of the virus.
Nearly 10,000 videos were created using “Eyes. Lips. Face. Safe”—including posts by Loren Gray and Meghan Trainor—and garnering close to 4 million likes and over 23,000 shares on TikTok alone.
How have your employees been coping through this? Are they all working from home? Have you been forced to make any cuts to your workforce?
First, I’ll say that I’m extremely proud of the resilience of our team during this stressful and uncertain time.
I think as a diverse company with international teams and offices, who were already accustomed to working productively from different spaces and time zones, we were well prepared to embrace the new work-from-home challenge. I think the key to our success has been communication, both from a leadership and internal perspective. We have weekly town hall meetings, and each week we have a different theme, whether it’s a dance party, sharing our moments of gratitude, to having our kids or pets join us. I’ve also been doing regular check-ins by calling employees across the organization to see how they are doing.
We have an extremely talented team, and we are determined to protect as many jobs as possible during this time. We have instead looked at other areas where we could reduce costs, tightly managing inventory receivables in capital expenditures, reducing expenses, and scaling back digital marketing investments in proportion to net sales.
Now that many regions are in the process of reopening, how does that affect your company, from transitioning employees, ensuring their work environments are as safe as possible, to working with supply chain and retail partners?
Our first priority is always the safety and wellbeing of our employees. We have taken many of the same actions we used in China for our U.S. employees, and again, thanks to the strict health protocols and dedication of our employees and suppliers, our team has remained healthy.
We are starting with an employee survey to see who is comfortable coming into an office or would prefer to continue working from home. We will always respect what makes anyone feel safe. We will begin opening offices when local health authorities allow it. We will use the same approach that we did in China where each office will have a fraction of the normal staff to ensure social distancing. We are also instituting an elevated hygiene protocol, and I’m sure we will evolve the plan as we get experience with what works and doesn’t.
We are continuing to work closely with our supply and retail partners, whom we have long-standing relationships with, to appropriately navigate this next phase as the country begins to reopen.
On a personal note, how have you been faring amid all this?
While it’s been an extremely challenging time, I am so proud of our team, and I feel fortunate to have the opportunity to spend more time with my family. My hope is that when we look back on this time, we will be able to see the silver linings. Some of the positives that I’ve taken from this experience so far include the opportunity to practice gratitude for all that we have and to continue giving back to our communities and others; the need to take care of ourselves both mentally and physically—taking breaks to get some fresh air, breathe, exercise, and rejuvenate; and the opportunity to be so present for our loved ones—kids, pets, significant others.
I’m a people person, so I’m looking forward to being together with my team in-person again, but for now, we’ll embrace our Zoom-themed parties and push on with the e.l.f. strength that I’ve had the pleasure to lead during this historic time.
