e.l.f. Beauty, Inc. (ELF) Q1 2021 Earnings Call Transcript

e.l.f. Beauty, Inc. (ELF 9.62%)
Q1 2021 Earnings Call
Aug 05, 2020, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day and welcome to the e.l.f. Beauty first-quarter fiscal 2021 earnings conference call. [Operator instructions] Please note that this event is being recorded. I would now like to turn the conference over to Melinda Fried.

Please go ahead.

Melinda Fried -- Head of Corporate Communications

Thank you for joining us today to discuss e.l.f. Beauty's first-quarter fiscal 2021 results. I'm Melinda Fried, head of corporate communications for e.l.f. Beauty.

As a reminder, this call contains forward-looking statements that are based on management's expectations, including those related to the category trends and longer-term outlook, and are subject to known and unknown risks and uncertainties. And therefore, actual results may differ materially. Important factors that may cause actual results to differ are detailed in today's press release and the company's SEC filings. In addition, the company's presentation today includes information presented on a non-GAAP basis.

We refer you to today's press release for a reconciliation of the differences between the non-GAAP presentation and the most directly comparable GAAP measures. Please note, after the presentation, there is a separate dial-in for the Q&A session, also noted in the press release. With me from management today are Tarang Amin, chairman and chief executive officer; and Mandy Fields, senior vice president and chief financial officer. Let me turn the webcast over to Tarang.

Tarang Amin -- Chairman and Chief Executive Officer

Thank you, Melinda, and good afternoon, everyone. I hope that you're staying safe and well. Today, we will talk about our first-quarter fiscal 2021 results, the creation of a new beauty lifestyle brand with Alicia Keys and the overall strategic framework for the company. I am so proud of the e.l.f.

team for delivering strong results in navigating major category headwinds during the COVID-19 pandemic. This is our sixth consecutive quarter of net sales growth with Q1 net sales of $65 million, up 8% versus a year ago. We also expanded gross margin to 67%, up nearly 500 basis points versus last year, and delivered adjusted EBITDA of $16 million, up 7% versus a year ago. Of the top five color cosmetics brands in the U.S., we were the only one to grow share in the quarter with 5.5% of the market, up 100 basis points.

We achieved all of this in a volatile category that was down double digits. We continue to excel on our multiple areas of competitive advantage by investing in our brand recharge and executing our five strategic imperatives. Our mission to make the best of beauty accessible to every eye, lip and face is more important than ever. We believe that our fundamental value equation and digital engagement, as well as our world-class team's ability to move at e.l.f.

speed, positions us well to continue to gain market share. Today, we are thrilled to announce our partnering with Alicia Keys to create a beauty lifestyle brand, code named Project Superwoman. I'll describe shortly why we believe this brand will be so special and will enhance the overall strategic framework for our company. But first, let me provide a few highlights on the quarter.

Our first strategic imperative is to drive brand demand. We have a number of initiatives that are driving greater brand relevance. We unleased a Bowl campaign last year to bring e.l.f. superpower to the forefront of the beauty conversation.

The original superpowers that our consumers can't get enough of are a 100% vegan and cruelty-free and first-to-mass holy grail products that deliver premium quality at unbelievable prices with universal appeal. During these uncertain economic times, we've seen our value messaging has even greater consumer relevance. Our sales growth accelerated once government stimulus checks and supplemental unemployment benefits hit consumers' wallets with new and existing consumers alike voting for e.l.f.'s exceptional value proposition. Search demand for e.l.f.

outpaced the category for the quarter with Google searches rising 1.5%, compared to a decline of 9.5% for the category and double-digit losses for key competitors. e.l.f.'s press impressions soared 333% for the quarter versus prior year, and we surpassed 5.5 million Instagram followers, emphasizing our growing audience. We recently conducted a Nielsen marketing mix analysis and saw strong ROI results in the absolute and relative-to-key benchmarks, giving us further confidence that our marketing and digital initiatives are driving profitable sales. Our record-breaking eyelipsface TikTok hashtag challenge, the most viral campaign in TikTok U.S.

history, continues to rise, reaching over 6 billion views and over 4.5 million user-generated videos to date. This is an increase of over 1.5 billion views and 1.3 million videos in the past quarter, highlighting the strength of our audience engagement on the platform. While continuing to leverage TikTok, we remain focused on our entire digital ecosystem. We're expanding our existing footprint with deeper engagement on key platforms, like YouTube, Snapchat and Pinterest, while seeking and testing new frontiers.

An amazing example of new frontiers is our unique brand collaboration with Chipotle, another brand favored by Gen Z. We worked together on a virtual prom collection that married their beloved food menu with our best-selling products. This limited addition, burrito-inspired makeup collection sold out within four minutes on elfcosmetics.com with 100% of these orders made by new consumers. The campaign had high engagement across all social channels with over 3 million TikTok views and over 350 million impressions across beauty, lifestyle, entertainment, and business press.

The strength of our value equation and brand-building activities is attracting new consumers to the brand. During the quarter, over 50% of our retail purchases were from new consumers. This was even higher on elfcosmetics.com with over 65% of those purchasing being new consumers. Furthermore, we're seeing that e.l.f.'s consumers are highly engaged with beauty and spending nearly 1.5 times more than non-e.l.f.

purchasers, our second strategic imperative is a major step-up in digital. True to our digitally native roots, we continue to lead with a digital-first strategy that is benefiting both elfcosmetics.com as well as our retailer.coms. During the quarter, we saw a major shift online with our digital channels expanding to 17% of our total business, up from 11% in FY '20. Q1 digital consumption grew triple digits versus a year ago.

elfcosmetics.com, the No. 1 mass cosmetics e-commerce site, powers our digital ecosystem. New consumers acquired in the quarter were up over 100% year over year. We also experienced strong gains in traffic, orders, conversion, and AOV.

A particular bright spot is our skincare business, which accounted for nearly 25% of our sales on elfcosmetics.com in Q1 versus 18% last year. Importantly, the AOV with skincare consumers is approximately $10 higher than our cosmetics-only consumers. Our Beauty Squad Loyalty Program grew to 2 million members, up over 150% year over year, and we believe it has even greater potential as a driver of our overall business going forward. App downloads reached over 130,000 with augmented reality continuing to drive conversion.

We also launched the e.l.f. app in the U.K. We continue to expand our digital footprint globally. Last month, we launched elfcosmetics.com/eu with a localized experience in Germany and the ability to ship to 10 other EU countries.

We are pleased with the acceleration in our overall digital commerce and the growth we're seeing on all retailer.coms, especially Amazon. Our third imperative of providing first-to-mass prestige quality products also delivered strong results. We continued our pace of product launches during COVID-19 and found that consumers embraced our innovation. Our biggest strategic focus is skincare, where we continue to see strong results behind our new Cannabis Sativa and Full Spectrum CBD collections.

These collections support our consumers' desire for wellness and self-care at an incredible value. Our Supers collection, powered by the trending super ingredient, niacinamide, also has seen a surge in demand. e.l.f. skincare consumption for the quarter was up 19% in track channels versus a category that was down 7%.

More recently, track channel consumption was up over 30%, and our elfcosmetics.com consumption was up over 100%. We have additional launches slated for the balance of the fiscal year expected to help propel our skincare momentum. We reinforce our strength in primers, brushes and brow pencils, maintaining our No. 1 position in all three segments.

We also continue to drive share gains in our market-leading Poreless Putty Primer and Camo Concealer franchises with segment share increases of 15 points and 13 points, respectively. The extension of our Poreless Putty franchise has been particularly successful with all three primers now ranking in the top 10 mass primers. We're also pleased with the results of our purpose-driven product collaborations and limited-time collections. We partnered with Jkissa for the second year in a row, this time featuring a 100% vegan, highly pigmented, 18-piece eye shadow palette.

Jkissa reinforces our shared values of cruelty-free and how e.l.f. stands with every eye, lip, face, and paw. The eyeshadow pallet and brush set sold out on our website in less than five days. We also introduced our retro paradise collection, a tropical-inspired line of products that was created after last year's Beautyscape, an event that gives rising beauty enthusiasts an opportunity to collaborate with e.l.f.

and create products. The winning team, the Glam Gals, and e.l.f. have been on an amazing journey together from the birth of the concept in the Bahamas to shelves at Target. This collection is proving, right now more than ever, we all need a passport to paradise.

Our fourth strategic imperative is driving national retailer productivity in centers around Project Unicorn, our initiative to improve assortment, presentation, and navigation at shelf. We successfully executed Phase 3 of Project Unicorn this past spring with better visual merchandising, particularly for our market-leading primers and Camo Concealers. We shipped to Target new Unicorn displays and flex towers for retro paradise. We continue to see the blurring of the physical and digital realms as excited consumers share their in-store experience through TikTok video creations, including this one, which quickly garnered 130,000 views.[Commercial break]

As pleased as we are with Unicorn execution, we continue to face category headwinds due to COVID-19. Ulta Beauty and our main international retailers, brick-and-mortar stores were closed most of the quarter. Even at Target and Walmart, our top two customers who remained open, we continue to see volatility and a definite slowdown with the recent surge in COVID-19. We're also lapping the benefits of the price increase we took last July in response to the 25% tariffs.

While we expect the category and our business to be challenged by the pandemic, we remain focused on our relative performance to key competition. We mentioned last quarter that given the strength of our productivity, innovation and consumer engagement, Walmart and Ulta Beauty plan to expand e.l.f. space this fall in a subset of their doors. This expansion will allow us to increase our skincare assortment at both customers.

For a perspective, skincare was 6% of our track channel consumption in FY '20. In Q1, it grew to 9%. Skincare comprises a much higher percentage of our elfcosmetics.com business at nearly 25%. We believe as our retail footprint in skincare expands with more space, we have the opportunity to further drive our skincare business.

Our fifth imperative is delivering cost savings to help fuel brand investments. I'm proud of our operations team. We're one of the first beauty companies to come out of COVID-19 restrictions in China fully operational. All of our suppliers are back in business in the first week, and we are running at full capacity after five weeks.

Not only did our team maintain supply continuity, they continue to generate cost savings via lean manufacturing techniques that have contributed to our strong gross margin rates. We've also identified significant COGS savings on key W3LL People products, which gives us the ability to invest in recharging the brand and sharpen retail pricing. Our new liquid fill manufacturing plant has continued to be delayed by COVID-19 as local restrictions have prevented us from doing engineering and installation work. The progress on our five strategic imperatives has been terrific, and we believe we have further opportunity with each.

We're equally excited by our progress on strategic extensions. We strongly believe there's an opportunity for significant value creation, leveraging the investments we've made in our team and infrastructure for other brands, both acquisitions and brands that we create. Our first strategic extension is a pioneering clean beauty brand, W3LL People. This acquisition is strategically important as consumers are becoming increasingly conscious of the ingredients in their products.

Our thesis is that we can benefit from the 12-year history W3LL People has as a pioneer in clean beauty with 40 EWG VERIFIED products, and in turn, leverage the investments we've made in our team and infrastructure to scale the brand. Last earnings call, we've already fully integrated this acquisition onto the e.l.f. platform. And now we're starting to realize synergies and make progress on brand growth initiatives.

The most significant activity this quarter was conducting the strategic work for our W3LL People brand recharge, similar to the work we did on e.l.f. last year. At the core of this recharge is our brand vision because all people can be W3LL People as we strive to make clean beauty accessible. We look forward to bringing this brand recharge to market over the coming months.

Here's an early peak.[Commercial break]

Our team has also been working on the creation of a groundbreaking new brand that I'm thrilled to announce.[Commercial break]

Anticipated to launch in calendar 2021, Project Superwoman is a new beauty and lifestyle brand created with Alicia Keys, 15-time Grammy award-winning artist, producer, actress and, New York Time's best-selling author. Born of Alicia's personal skincare journey and her passion for bringing light and positivity in the world, the brand vision is more than skin deep. With an inclusive point of view, an authentic voice and a line of skin-loving, dermatologists-developed, cruelty-free products, Project Superwoman aims to bring new meaning to beauty by helping people honor ritual in their daily life and practice intention in every action. Make no mistake, this is not another celebrity beauty line because Alicia is more than an icon, she's an inspiration.

In her song lyrics, numerous interviews and editorials, and in her candid New York Times' best-selling new book, More Myself: A Journey, she has openly and honestly shared her skin struggles, her frustration with society's unrealistic beauty ideals and her own journey to finding clarity, strength and a deeper knowledge of her real self. Now through this endeavor, she aims to help others find that same place of peace and power within themselves.[Commercial break]

Our innovation team has already developed a robust multiyear, multi-category product pipeline with Alicia Keys and Dr. Renee Snyder, co-founder of W3LL PEOPLE and board-certified dermatologist. We expect Project Superwoman to be available online and in retail outlets in calendar-year 2021. We look forward to unveiling more in advance of our Q2 earnings call in November.

We believe strategic extensions are key to our long-term growth as we evolve from a single-brand to multi-brand beauty company. Before I turn the call over to Mandy, let me provide a bit more perspective on the overall strategic framework of the company and our brands. e.l.f. Beauty is the parent company, the bold disruptor with a kind heart.

e.l.f. Beauty stands with every eye, lip, face, and paw. This deep commitment to inclusive, accessible, cruelty-free beauty has fueled the success of our namesake, e.l.f. Cosmetics brand, since 2004.

We continue to expand our portfolio with strategic extensions that support our purpose and values. e.l.f. Cosmetics makes the best of beauty accessible to every eye, lip, and face. We make high-quality, prestige-inspired cosmetics and skincare products at an extraordinary value and are proud to be a 100% vegan and cruelty free.

W3LL People is a clean beauty pioneer, raising the standard for high-performance, plant-powered, cruelty-free cosmetics since 2008. Founded on the principles of purity, artistry, and responsibility, we are committed to creating clean products that help people be well, look well and do well. Project Superwoman is a beauty lifestyle brand carefully crafted with Alicia Keys. With an inclusive point of view, an authentic voice in the line of skin-loving, dermatologist-developed cruelty-free products, Project Superwoman will aim to bring new meaning to beauty by helping people to find peace and power within themselves.

From a price tier standpoint, e.l.f. Cosmetics has extraordinary value in the mass segment, W3LL People's plant-powered beauty in the masstige segment and Project Superwoman is lifestyle beauty in entry-level prestige. All three brands are accessible relative to their competitive set. Supporting all of these brands is our high-performance team and company values to delight our consumers, do the right thing, work together to win and to execute with speed and quality.

In other matters, we're pleased to have reached agreement with Marathon Partners in early July that allows us to remain focused on executing our strategic imperatives. We're also happy to welcome Lori Keith as another strong independent board member. Lori brings to our board the perspective in an experienced portfolio manager and expertise in ESG. We would also like to thank TPG for their six-and-a-half-year investment in the company and helped building e.l.f.

Beauty from a $100 million revenue private company to a nearly $300 million public company. Consistent with its practice to responsibly return money to its investors, TPG has now completely exited its position in e.l.f. Beauty. TPG's investment in e.l.f.

was made for growth fund raised in 2011 for which e.l.f. delivered strong returns. In summary, we're moving at e.l.f. speed to grow share and position ourselves for an even brighter future.

I believe that our digital strength and core value proposition will enable us to outpace the category in this uncertain economy. I'll now turn the call over to Mandy to discuss the financials.

Mandy Fields -- Senior Vice President and Chief Financial Officer

Thank you, Tarang, and thank you all for joining us this afternoon. Today, I'll cover our Q1 financial results, provide perspective on what we're seeing in the current operating environment and discuss how our strategic extensions connect to our long-term economic model. We are quite pleased with our Q1 results. We delivered net sales of $65 million, up 8% from a year ago.

This growth was mainly driven by e-commerce performance and track channel customers, partially offset by Ulta and international store closures that persisted most of the quarter. Our growth was further accelerated once we started to see stimulus impact consumers' wallets. Our performance in the last 12 weeks ending 06/13, outpaced the large legacy brands in our space, and our outperformance versus the category accelerated with market share up 100 basis points. Gross margin of 67% was up nearly 500 basis points compared to prior year.

elfcosmetics.com was the primary driver behind our expanded gross margin. With the consumer shifting online, our site represented more of our sales mix versus a year ago, and total company gross margin benefited from that mix shift. Given the acceleration in sales momentum we saw in elfcosmetics.com, we were also able to be less promotional and drive stronger gross margin overall on our site. The benefit of e-commerce, margin accretive mix, FX, and price increases lifted overall gross margin for the quarter.

To the extent consumers shift back into pre-COVID-19 shopping behavior and away from e-commerce, we expect the benefit we are seeing in gross margin will roll back by approximately 200 basis points. On an adjusted basis, SG&A as a percentage of sales was 51%, compared to 47% last year, primarily driven by annualizing headcount related to building out our marketing, digital, and innovation capabilities, increased operational costs related to higher e-commerce volume in the quarter and increased investment behind marketing and digital on a dollar basis. Marketing and digital investment as a percentage of net sales was 11%. Given the strong sales performance in the back half of the quarter, we ended up below our 12% to 14% target.

We expect higher levels of marketing spend as a percentage of sales over the balance of the fiscal year as we target to stay within the 12% to 14% range on a full-year basis. Q1 adjusted EBITDA of $16 million was up 7% versus prior year with margin at 24% of net sales. Adjusted net income was $9 million or $0.17 per diluted share, compared to $7 million or $0.14 per diluted share a year ago. For the three months ended June 30, we generated $12 million in cash flow from operations.

We also reduced capital expenditures by $2 million versus prior year and repaid the $20 million we had outstanding on our revolving credit facility this quarter. We ended Q1 with $54 million in cash on hand, compared to a cash balance of $61 million a year ago. Liquidity remained strong with the combination of our cash balance and access to our revolving credit facility sitting at over $100 million. We expect our cash priorities to remain on fortifying the balance sheet during the COVID-19 pandemic, investing behind our five strategic imperatives, and supporting strategic extensions to fuel long-term growth.

From an outlook standpoint, our full-year fiscal '21 guidance remains suspended. The performance we delivered in Q1 was strong, but we are cautious not to anchor near-term expectations on a quarter with multiple external variables in play. We expect the overall economic environment to remain quite volatile. We also expect consumer behavior to remain impacted by COVID-19 at least through the end of a calendar year, if not our full fiscal year.

While we experienced double-digit growth in track channel data in the back half of the quarter, we expect to see a leveling off as the first round of stimulus dollars dries up and as we cycle the price increase we implemented last summer. Additionally, we are seeing a great deal of volatility in our recent sales data, especially as COVID-19 cases surge across the U.S. We expect this also to impact track channel results in the near term. On the expense front, we continue to take steps to reduce where we can while still investing in our long-term growth.

As stated last quarter, we did not expect savings in Q1 but expected some progress in Q2. Given the improvement in sales since the start of Q1, increased operational costs associated with the sales shift toward elfcosmetics.com, and our current plan to keep marketing in digital in the 12% to 14% range for the year, we do not expect to see material cost savings on a year-over-year basis. We expect to have stronger gross margin if the shift in e-commerce remains with net margins partially offset within SG&A. We will also have certain costs related to our strategic extensions that we expect to treat as adjustments to SG&A for the balance of the year.

Examples include integration cost on W3LL People and development costs on Project Superwoman. We expect $5 million to $7 million of working capital and capex investment across these brands in fiscal 2021 as we prepare for retailer distribution. This aligns with our cash priorities, leveraging our existing cash to invest in long-term growth. Lastly, I cannot express how excited I am about Project Superwoman.

Adding this brand, plus W3LL People, to our portfolio reflects our deep commitment to inclusive, accessible and cruelty-free beauty. From a financial standpoint, our interests are aligned with Alicia's with a royalty and milestone-based fee structure that leverages both cash and e.l.f. Beauty equity. We believe this brand is both distinctive and complementary to our portfolio and allows us to leverage the cost structure we have in place as we scale it up.

While we expect the short term to be quite volatile and uncertain, we continue to believe in our long-term economic model once the retail environment returns to normalcy. We believe that our digital strength and core value proposition will enable us to continue to outpace the category and position the e.l.f. brand for growth. And with the addition of W3LL People and Project Superwoman, we believe that the higher end of our long-term economic model can be achieved.

With that, I'll turn the presentation back to Tarang.

Tarang Amin -- Chairman and Chief Executive Officer

Thanks, Mandy. This is indeed an exciting time for e.l.f. Beauty. We are taking market share and believe we're well-positioned to ride out the current storm.

We continue to fuel our momentum on e.l.f. Cosmetics, as well as develop additional growth vectors behind W3LL People and Project Superwoman. What gives me great confidence in our long-term potential in white space is a set of competitive advantages that we possess. We have the right team with an employee base at 73% female, 60% millennial, and 46% diverse, representing the consumers that we serve.

We're one of only nine public companies with a board of directors composed of 67% women. We know our consumers and how to engage them with our No. 1 mass e-commerce site and reach on key digital platforms. We know how to make products people want with a unique ability to launch holy grail, first-to-mass products.

We move at e.l.f. speed with the ability to bring new products to market in as few as 13 weeks. We have world-class operations providing us the best combination of cost, quality, and speed. We know how go to market and grow through our strong relationships with our national retail partners.

We have significant opportunities in both additional space and geographies. We know how to build brands as we move from a single-brand company to a multi-brand house. While these remain difficult times, we are optimistic in the long-term potential of this company. With that, operator, you may open the call to questions.

For those who'd like to ask a question, please do so through a separate dial-in line noted on the screen. Those not asking questions can hear the question-and-answer session through the webcast. We'll pause a few minutes for those seeking to ask questions to queue up on the dial-in line.

Questions & Answers:

Operator

[Operator instructions] And our first question will come from Erinn Murphy with Piper Sandler.

Erinn Murphy -- Piper Sandler -- Analyst

Great. Thanks. Good afternoon, and congrats on a strong first quarter. My question -- my first question is really around the progression of trends that you guys saw in the quarter.

Maybe if you could speak to what you thought mass from a replenishment perspective. And then at Ulta, specifically, since that was closed for part of the quarter, what did you start to see as that channel or that retailer opened up mid quarter?

Mandy Fields -- Senior Vice President and Chief Financial Officer

Yes. So in terms of what we saw within the quarter, it was quite a volatile quarter. So if you recall, when we were in April, our trends were down about 30% in track channels. And then toward the back half of the quarter, we really saw an acceleration, and we believe that was primarily driven by stimulus and the extra unemployment benefit that our consumers were receiving.

I would say that from an Ulta standpoint, we saw strong growth in e-commerce with Ulta. But to your point, their stores were closed most of the quarter so that we did not have any sales growth there for Q1.

Erinn Murphy -- Piper Sandler -- Analyst

OK. Thanks. And then I guess my second question is really around Project Superwoman. Given the pricing of this brand, I think, Tarang, you talked about entry-level prestige.

How are you thinking about the channel opportunity there? Will you be working with new retailers? And then you've referenced it as kind of a lifestyle brand. I'm curious if you're thinking about more wellness, in addition to skin and cosmetics and some of the anchors that you do so well.

Tarang Amin -- Chairman and Chief Executive Officer

Erinn, we're thrilled about working with Alicia Keys on a new lifestyle beauty brand. What we mean by lifestyle beauty brand is this brand is much more than just product alone. Alicia is someone of real substance who has meaningful things to say on beauty, wellness, inclusivity, many of the core values that we stand for. So in terms of your question on channel mix, as a digitally native brand ourselves, our first focus will be online.

There's a tremendous amount of content and advise that we can share that we will want to do through digital engagement first. We'll be revealing more on the brand, including the brand name, lineup, and retail partnerships probably by the time of our November call.

Erinn Murphy -- Piper Sandler -- Analyst

Great. Thank you, both.

Operator

Our next question will come from Andrea Teixeira with JP Morgan. Please go ahead.

Andrea Teixeira -- J.P. Morgan -- Analyst

Hey. Good afternoon there. And first of all, congratulations on the partnership with Alicia. You cannot find, I would say, a more inspiration ambassador.

And also on your first-quarter results, very positive. So I wanted to just understand and perhaps make sure that we do understand correctly from Mandy's comment along the margin. Obviously, the puts and takes of the gross margin will be less impact -- less positively impacted this quarter than before. But I was just thinking of your elevated -- you anniversarying -- first of all, on the gross margin, understanding you're anniversarying the price increase.

So I was curious to see how much that impacted the last year's quarter so that we can take that off, and also, how we should be thinking on the elevated SG&A. I think when I saw the numbers from my math, I think you kind of like increased, and you're anniversarying those investments now. So I was curious to see, like, are you implying margins are going to be flattish? Or you're still going to see an improvement in margins on an EBIT level, but that being said, less improvement than we saw in the prior quarter? Thank you.

Mandy Fields -- Senior Vice President and Chief Financial Officer

Yes. OK. Hi, Andrea. I will start with the top.

So your question on gross margin. So our gross margin was -- we picked up a benefit this quarter because of the shift in e-commerce, and so that benefit was probably about 200 basis points that we saw there in the quarter. Now to the extent that consumers shift back to normal in store shopping patterns, that gross margin benefit will roll the way on a sequential basis. In terms of pricing, Q2 is when we implemented the pricing last year so that's when we'll start to cycle that impact.

And pricing, overall, was somewhere in the range of 200 to 300 basis points of benefit for gross margin standpoint. And then on SG&A, we are anniversarying some of the investments that we made in our infrastructure behind our marketing and innovation and digital capabilities. So that is one of the drivers of why you see SG&A higher on the quarter, as well as on a dollar basis, incremental costs, incremental investment in marketing and digital. And then also, as I talked about, the e-commerce shift, we got the benefit in gross margin, but there's also incremental costs that come into the SG&A line, so those you picked up in SG&A in this quarter.

And in terms of adjusted EBITDA and margins on the outlook, I mean, we have suspended guidance, so I can't really give you a ton of direction on that in terms of expectations. But I can say that, as we think about marketing investment, we only had 11% this quarter that certainly we want to get up into that 12% to 14% range for the balance of the year.

Andrea Teixeira -- J.P. Morgan -- Analyst

That's helpful. Thank you very much.

Operator

Our next question will come from Steph Wissink with Jefferies. Please go ahead.

Steph Wissink -- Jefferies -- Analyst

Thank you. Good afternoon, everyone. Also, congratulations from us on a strong quarter. Tarang, I want to start with you, just a question on your comments on space gains.

You assigned those gains to skincare. So I'm curious if you can talk a little bit about your agenda on skin, specifically at Walmart and also with those space gains. And I think you've also referenced that partnership with Alicia will include some skincare, so maybe just talk broadly about your agenda with skincare for the course of the next six and 12 months.

Tarang Amin -- Chairman and Chief Executive Officer

Sure. Hi, Steph. What I'd tell you is skincare has been a strategic importance to us for the last couple of years, and we continue to pour more into skincare, both from an innovation standpoint, as well as what we've seen in our momentum and growth trends. So I talked in our prepared remarks, skincare, as a total percentage of our business, is 9% but represents 25% of our elfcosmetics.com business.

So we see quite a bit of room to grow in skincare, particularly as we get larger retail footprints on skincare. The most developed customer we have right now on skincare is Target where we do have more space. So as we pick up more space in other retailers, including Ulta Beauty and Walmart this fall, it gives us the opportunity to get more of our skincare items in. So we continue to see greater strength in skincare as we're able to get a bigger footprint there.

And our innovation on skincare is definitely resonating. The Cannabis Sativa lines, our recent CBD, Full Spectrum CBD line, as well as our Supers line, all delivered important results to the quarter, and we have a great pipeline for the future. And then in terms of our new lifestyle beauty brand with Alicia Keys, a lot of that was born really through Alicia's personal journey and struggles in skincare and what she has to say on overall beauty. And so that line is much more than just product but certainly will have a focus initially on skincare where we've also developed a multi-category, multiyear pipeline on that business.

And the last thing I'll tell you on skincare is we continue to increase our capabilities in this area. Dr. Renee Snyder, who's one of the co-founders of W3LL PEOPLE and a board-certified dermatologist, has actually aided our innovation team in the development of some of the products for Alicia Keys' line, as well as what we're doing on W3LL PEOPLE.

Steph Wissink -- Jefferies -- Analyst

Tarang, can I do one follow-up, just on your new to customer file? I think you mentioned 50% of your purchases were from new customers and 65% on elf.com. Any unique cohort insights on those new customers that you're finding new to file?

Tarang Amin -- Chairman and Chief Executive Officer

Yes. We're really pleased to see the level of new consumers coming to our brand. We -- the initial view that we have is a combination of consumers coming to us from legacy brands on the mass side, as well as trade-down from prestige. So the specific stats are about 56% of consumers in retail came to us are new consumers and over 65% on elfcosmetics.com.

We'll get better profiles of that over time. That's just one quarter's worth of data. So a lot of that will depend how many of them are we able to retain, but we're really pleased by how many new consumers are coming into the franchise.

Steph Wissink -- Jefferies -- Analyst

Thank you.

Operator

Our next question will come from Linda Weiser with D.A. Davidson. Please go ahead.

Linda Weiser -- D.A. Davidson -- Analyst

Yes. Hi. I'm wondering if you could update us on your international business, specifically what retailers you have distribution in Europe and the U.K. and just talk about some of your aspirations there.

And also, is there any long-term plans for penetrating the Chinese beauty market? Thanks.

Mandy Fields -- Senior Vice President and Chief Financial Officer

Linda, so let me take that question. On the international business, I would say, for the quarter, international, a similar story to what we saw here in the U.S. So our international online business was very strong with the international retailers, if you think about our presence in the U.K. at Boots and Superdrug were closed.

Those stores were closed most of the quarter as well. So we saw growth overall in international, but it was driven by e-commerce. And so I would say, international is definitely still an important piece of our business and tremendous white space remains in that market. And then in terms of China, I'm going to pass it to Tarang to speak more about that.

Tarang Amin -- Chairman and Chief Executive Officer

Sure. We have high hopes for our business in China as well. Our business in China right now is 100% online, really, through some of the key marketplaces, the TMall and JD. What we find in China e-commerce is really important as a brand value standpoint for us is having been manufactured in country our ability to through a different regulatory scheme where we are guaranteed our cruelty-free status.

And so that's for at least the foreseeable future until regulations change, the only aspirations we'll have will be on e-commerce, but it happens to be the largest e-commerce market in the world. And I'd say we're still very much in the early days in terms of our penetration there, but it's a key area of focus.

Linda Weiser -- D.A. Davidson -- Analyst

Thank you.

Operator

Our next question will come from Oliver Chen with Cowen. Please go ahead.

Oliver Chen -- Cowen and Company -- Analyst

Hi. Congrats on the new brand. Regarding Project Superwoman and Alicia Keys, what are your thoughts on the long-term opportunity of this brand relative to e.l.f. and how you're thinking about the AUR, as well as points of distribution, more broadly, relative to your presence at e.l.f.? And would also -- thanks for the details on skincare as well.

As we model that going forward, are there implications for AUR and/or margin as that looks like a nice opportunity to continue to grow that mix? And where might that mix go over time?

Tarang Amin -- Chairman and Chief Executive Officer

Sure. Hi, Oliver. So we are thrilled to work with Alicia Keys. And one of the things that attracted us to Alicia was not only her long-standing vision and mission as she thinks of beauty much broader and greater depth than many others, but the fact that she's not just a celebrity, she's much more.

She's a person of real substance. Not only she's a 15-time Grammy Award winner, artist, producer, now even the best -- New York Times best-selling author with her memoir, More Myself, she has real substance. And so a big part of this work with her is really developing a long-term vision for the brand. So as I mentioned earlier, we've already mapped out a multiyear product pipeline, as well as other things that we can do, and so we're really excited.

And then in terms of how that relates to e.l.f., I would say one of the really exciting things about the company right now is we continue to see a great deal of white space on e.l.f. whether it'd be on space, bringing new consumers to our brand, our level of innovation, overall value equation, you add to that W3LL PEOPLE and a clear pioneer in clean beauty, as well as this lifestyle beauty brand with Alicia Keys, we think creates a much stronger portfolio for us as a company, such that we have greater confidence once things return to normalcy of hitting the higher end of that long-term economic model that Mandy previously shared. And then in terms of mix, you've definitely heard right that consumers who buy skincare on elfcosmetics.com have a $10 higher average order value than consumers who only buy cosmetics. Skincare, while still an extraordinary value from an e.l.f.

standpoint, does have a higher mix from a price standpoint. So as that happens over time, we would expect the AURs of the company to increase the skincare proportion of the overall business increases.

Oliver Chen -- Cowen and Company -- Analyst

OK. Lastly, thank you, on innovation and ahead. Regarding ingredients and your thinking about R&D specific to ingredients and proprietary technology you can develop internally, what's on your mind or road map in terms of differentiating yourself from an ingredient innovation perspective?

Tarang Amin -- Chairman and Chief Executive Officer

Well, we've long been focused on ingredients from a standpoint of consumers are increasingly conscious of the ingredients that are in their products. So a while ago, we formulated away from parabens, fillets, other ingredients consumers did not want to see in their products. What you heard from this last quarter is a real focus on ingredients and wellness, particularly in our skincare products. Our Cannabis Sativa, Full Spectrum CBD lines, even our Supers collection that has niacinamide in it, definitely have a very strong ingredient focus.

I think bringing W3LL PEOPLE into the company gives us even stronger capability in this area, plant-powered, clean beauty brand that has not only one of the highest standards in clean beauty labels, but our ability to really take lessons from that, apply it to not only e.l.f., but also what we do on the new lifestyle beauty brand we create with Alicia Keys, really, you see greater focus on the ingredients that are in our products, and I feel great about our capabilities in that regard.

Oliver Chen -- Cowen and Company -- Analyst

Thank you. Best regards.

Operator

Our next question will come from Dara Mohsenian with Morgan Stanley. Please go ahead.

Dara Mohsenian -- Morgan Stanley -- Analyst

Hey, good afternoon, guys.

Tarang Amin -- Chairman and Chief Executive Officer

Good afternoon.

Mandy Fields -- Senior Vice President and Chief Financial Officer

Hi, Dara.

Dara Mohsenian -- Morgan Stanley -- Analyst

Can you discuss the opportunity for shelf space gains at brick and mortar in the fall? And as we look out to calendar 2021 in color, building on the earlier question on skincare, your share gains were obviously very strong in this quarter, and a lot of your larger share competitors saw some pretty substantial declines. So I'm just wondering if the recent performance drives more of a step change in shelf space opportunity going forward in color over the next year or so? And then secondly, also on the same subject, were there shelf space changes from this spring that were delayed as a result of COVID? Is it realistic to expect changes this fall? Or are retailers still pretty apprehensive about making changes to their shelves in this COVID environment? Thanks.

Tarang Amin -- Chairman and Chief Executive Officer

So, Dara, I'd say we have great potential when it comes to shelf space gains in color. And in fact, the gains that we're going to pick up at Walmart and Ulta include both color as well as skincare. So let me -- our preferred sets are expanding the space we already have on e.l.f. and housing skincare within our e.l.f.

set. That's the approach that we've taken at Target and has done very, really well with -- for us. Walmart will follow a similar approach as they expand shelf space in a subset of their doors. Ulta Beauty has decided to put skincare in their skincare sets, and the additional space will pick up there in the fall will be in their skincare set.

So we'll see a combination in both places, both picking up more space on e.l.f. in our color cosmetic sets where we can put more skincare items in, as well as secondary location in the skincare aisles. And we feel good about that. In terms of our current plans, we're still on track for the gains that we had -- all of our spring resets -- actually, I should back up, all of our spring resets were executed Phase 3 of Project Unicorn, which had much greater focus on visual merchandising, particularly on our key hero items, like Poreless Putty Primer and Camo Concealers.

Those are executed well, and we're definitely seeing the benefits of that Phase 3 Unicorn execution. We are on track for our space gains this fall at both Walmart and Ulta Beauty and are also hopeful for our future space gains, although we do not have confirmation of any of those. Yes, those usually come a bit later, and we'll have to see how in this environment where retailers go. But we certainly have much more room when it comes to space gains.

Dara Mohsenian -- Morgan Stanley -- Analyst

OK. And has the performance the last few months, just to push a bit more there, has that sort of changed the conversations with retailers? Do you think that's given you more incremental opportunity than you would have expected six months ago pre-COVID? And then just a different question. In terms of the new customers you picked up, can you talk about how you are trying to hold on to that customer going forward and maybe repeat rates you've seen early on from some of those new customers? That would also be helpful. Thanks.

Tarang Amin -- Chairman and Chief Executive Officer

Yes. Well, I would say on the space opportunity, I don't believe it's changed the conversation as well as much as continue to strengthen our case. This is the sixth consecutive quarter where we've had net sales growth. Our productivity continues to increase as the key retailers we're at.

Our innovation pipeline is bigger and better than most competitors that they see and our consumer profile. All of those really argue for more space, and so I think that conversation is well established. It really comes to the retailer's own strategies and when are they able to make changes to their shelf sets. But the overall case for space, I think, has been well made and is well received by almost all of our retail customers.

And then in terms of new customers that we've been picking up, I'd say our primary focus there, particularly online, is through our Beauty Squad Loyalty Program. As I mentioned that loyalty program is now up to 2 million members, up over 150% versus last year, and will be an increased area of focus for us as we continue to convert those new customers to loyal e.l.f. consumers. And initiatives that we've previously talked about, such as our app and our ability to integrate in receipt scanning where someone can get e.l.f.

loyalty points, regardless of where they buy their e.l.f. products, will help aid in that journey. So our focus is converting more of those new consumers over to our loyalty program and really retaining them over time.

Dara Mohsenian -- Morgan Stanley -- Analyst

Great. Thanks.

Operator

Our next question will come from Bill Chappell with Truist Securities. Please go ahead.

Bill Chappell -- Truist Securities -- Analyst

Hey, thanks. Good afternoon.

Tarang Amin -- Chairman and Chief Executive Officer

Good afternoon.

Mandy Fields -- Senior Vice President and Chief Financial Officer

Hi, Bill.

Bill Chappell -- Truist Securities -- Analyst

Tarang, going back to the Project Superwoman, I mean, you know, as well as anybody, of the pros and cons of kind of a celebrity endorsement and kind of a celebrity brand. And just trying to understand the thought process because it's obviously different marketing, advertising, everything that comes with that type of brand versus where e.l.f. has been. But also, maybe financially, does it mean that you're going to have to take up marketing and advertising beyond the 12% to 14% to really launch a brand-new brand and make a big splash? Or do you look to it being like e.l.f.

was kind of slowly but surely building out a presence over a number of years.

Tarang Amin -- Chairman and Chief Executive Officer

Yes. So first of all, Bill, I think one of the things that really attracted us to Alicia Keys is she's more than a celebrity. She has real substance and someone we can see building a brand with long term for many years. And our approach is more consistent with e.l.f.

than maybe some of the other models that you're familiar with of those who do celebrity brands. This is really a lifestyle beauty brand for the long term. And so the approach that we take, which is digital first, very much remains intact. Our approach, as we're able to then announce, which retailers will be entering at a later date, I think you'll see a great deal of interest in doing things the e.l.f.

way and building this brand for long term. In terms of the specific levels of marketing support, we haven't talked about that yet relative to -- we haven't given the overall size of the new lifestyle brand and our approach there. What I would tell you is it is not necessarily the big-bang approach once where we're trying to get as much sales, and then you move on to the next thing. This is something we definitely want to build and nurture for the long term.

And so I think I've talked previously about, this is not one where we're just planning to spend tens of millions of dollars and then forget about the brand. This is something we definitely want to build, and the launch plans very much reflect that in terms of leading with content, nurturing online, and then taking selective retailer relationships to help further amplify and magnify the brand, all with a hand-in-hand with Alicia Keys, who has an incredible and loyal following.

Bill Chappell -- Truist Securities -- Analyst

Got it. And then just in terms of follow-up on cadence, I mean, is this a typical you need to have the brand, the placement, all that done by calendar year end, so you're ready for shelf planogram resets in the spring? Or will it drag out -- well, not drag out. Will it phase out a little bit longer than that?

Tarang Amin -- Chairman and Chief Executive Officer

We haven't given the specific timing, but what I would say is we'll lead online, and then you'll see retail penetration a bit later. We will probably be in a better position to talk some of those specific plans on our next call.

Bill Chappell -- Truist Securities -- Analyst

Got it. And then just one last one there. Do you see having more brands? You said now a multi-brand and with W3LL PEOPLE, e.l.f. and this, is that enough? Or do you see -- are there other areas you could go down the road?

Tarang Amin -- Chairman and Chief Executive Officer

We definitely see other places we can go. The overall strategy or the strategic framework is taking the capabilities we have in team and our infrastructure and applying them to other fast-growing, emerging brands. I would say we have our hands full for the time being, particularly with the tremendous white space we have on e.l.f., our plans for W3LL PEOPLE, including the sneak peek we gave on the brand recharge and what we can do on that brand. And then obviously, there are excitement on the lifestyle beauty brand with Alicia Keys, but we are open to other tuck-in acquisitions, as well as brands we create.

We don't have any immediate plans for that given our focus on these three brands, but it is something that you could see in the future as part of our overall strategic framework and leveraging the team and capabilities that we've built.

Bill Chappell -- Truist Securities -- Analyst

Perfect. Thanks so much for the color.

Tarang Amin -- Chairman and Chief Executive Officer

Thanks.

Operator

Our next question will come from Jon Andersen with William Blair. Please go ahead.

Jon Andersen -- William Blair -- Analyst

Good afternoon, everybody, and thank you for the question. Just two quick ones from me. Tarang, you mentioned that Phase 3 of Project Unicorn was largely, I think, complete this spring. Can you talk about -- are there additional efforts wrapped in Unicorn that we should expect to see during coming quarters? Or do you kind of view it now as mission accomplished with respect to that effort and refocus on other areas going forward?

Tarang Amin -- Chairman and Chief Executive Officer

Hi, Jon. I don't think you're ever going to hear me stop talking about Project Unicorn as it has multiple phases. And if you really look at the objectives of Project Unicorn, they really were to elevate our presentation at shelf in retail settings and increase our productivity. And I don't think that will ever be done.

We do like what we're seeing in each successive phase of Unicorn. So the next couple of phases of Unicorn will continue the journey that we had this spring of continuing to be able to elevate our presentation and bring greater visual merchandising to our retailer shelf sets. The first Phase 3, as I just mentioned, really focused on some of our core hero items, such as Poreless Putty Primer and Camo Concealers, which, if you looked at them this year versus last year, it's so much easier to navigate on the shelves and find the areas that we have real strength. We see additional opportunities to continue to elevate that visual merchandising.

So in the additional space that we'll pick up this fall at both Walmart and Ulta Beauty, you'll continue to see the evolution of Unicorn there. And we're hoping, in future years, particularly next year, as I look at calendar year 2021, the next version of the step change in terms of what e.l.f. looks like on shelf. I mean, I think if you -- at some point, maybe in one of these webcasts, we'll show pictures of what we'll look like through the successive phases of Unicorn.

And it's quite clear in terms of the elevation of the brand and how much easier it is for consumers to navigate, which, in turn, has led to much greater productivity. And we still see further room to grow.

Jon Andersen -- William Blair -- Analyst

Excellent. You mentioned briefly in your prepared comments that the new liquid fill facility had been delayed due to COVID. Do you have an update on when you think that facility will be production-ready? And are there any capacity constraints that you need to deal with in the near term given the delays there?

Tarang Amin -- Chairman and Chief Executive Officer

Yes. So our liquid fill facility in Southern California, unfortunately, has been a victim of the shutdowns related to COVID-19, so we've not been able to do the engineering and installation work necessary. We're still under a lockdown for that facility, so I do not have an update on timing of that facility. I would say it would be later this year, hopefully, and I think we're all hoping for resolution to COVID-19 and returning to normalcy.

But I think that will be subject somewhat to our path on when are we back to normal from that standpoint. In terms of capacity, I'd say -- actually, one other thing on the liquid fill facility, the objectives of that facility are still very much intact, which is gives us further supply diversification and also significantly reduces lead times, which we're interested in, particularly as we think of the robustness of our innovation program. So when we are able to open it up, I think we'll have -- we have high hopes on being able to achieve those objectives. Meanwhile, I am so proud of our team, our operations team, particularly our team in China.

We were one of the first beauty companies to be fully operational after COVID restrictions were lifted. I think we're at full capacity within five weeks. We've not seen any meaningful supply disruptions during this volatile time, and our team continues to deliver lean manufacturing savings and ideas for the future. And then from a capacity standpoint, we have plenty of capacity to meet our needs, and a lot of that will be and really incumbent on our planning.

So we continue to see a lot of volatility in the business, but we feel great about our overall, the strength of our supply chain in that combination of cost, quality and speed we're able to deliver and I think really being put to the test during the COVID-19 pandemic and really coming through that, so far, with flying colors.

Jon Andersen -- William Blair -- Analyst

Great. I actually -- if I could squeeze one more in. So you've gone pretty quickly from one brand, e.l.f. prestige-like line at value price points to now having W3LL PEOPLE, clean beauty brand, EWG VERIFIED, real, rich credentials there to now adding a lifetime -- lifestyle beauty brand.

So going from I guess one to kind of three brands increases some of the complexity of managing the business, how you allocate resources to innovation, marketing and then more operational aspects like production planning, inventory management, are there changes that you have need -- you have made or need to make internally from an organizational standpoint, a people standpoint in order to effectively steward these three brands as opposed to the single-brand focus you've had in the past?

Tarang Amin -- Chairman and Chief Executive Officer

Sure, Jon. I'll tell you two things there. First and foremost, we've -- out of our 250 employees, I think we've hand selected almost 240 of them now, and so we tend to pick from blue-chip, CB, consumer and beauty environments. So much of the team comes with multi-brand experience.

Everyone on the executive team has managed multiple brands at the same time, often in categories that involve many more brands. So I think the capabilities we have are really good from an ability to manage a portfolio of brands. And then the second thing is you heard Mandy talk about our SG&A levels. And some of that SG&A really went into a vision of building this multi-brand house.

So we have added resources in marketing, digital innovation, other areas of the company that give us greater confidence to be able to manage a portfolio of brands with some mix of people who can manage multiple brands, if I think of a lot of the back-office functions that it doesn't matter whether we have one brand or three brands that you can spread against, as well as dedicated resource by these -- each of these brands as well. And so I feel good having lived for almost 30 years with a multi-brand environment, our ability to do that. But certainly, that's also one of the reasons why we really want to make sure we execute these three with excellence before moving on to additional brands.

Jon Andersen -- William Blair -- Analyst

Thanks so much, and congratulations on a strong quarter.

Tarang Amin -- Chairman and Chief Executive Officer

Thank you.

Operator

Our next question will come from Rupesh Parikh with Oppenheimer. Please go ahead.

Rupesh Parikh -- Oppenheimer and Company -- Analyst

Good afternoon. Thanks for taking my question. So just going back to the commentary, just about some of the volatility around the spikes and infections that you've seen more recently. Any more color you can provide in terms of the impact, whether you see it across all channels, categories, more retail, more e-commerce? Just some thoughts there.

Mandy Fields -- Senior Vice President and Chief Financial Officer

Yes. Hi, Rupesh. So I would say that with the surge in COVID cases and the uncertainty around another phase of stimulus, we have started to see softening in the track channel. I would say in the data that was released just on Tuesday, we were in the 3% range on a -- like a weekly basis.

So I think there's still a lot of volatility to be seen out there until there's more of a normal environment. We still have COVID, and then we still have uncertainty in the broader economy. And so I think we're going to have to just take it week by week here as we look forward.

Rupesh Parikh -- Oppenheimer and Company -- Analyst

Great. And then I'll sneak in one more question. So I guess, just on the promotional environment, I'm curious what you're seeing right now. And then if you look at some of your retail customers, do you see the need maybe to support them more later in the year, just given the difficult make of backdrop?

Mandy Fields -- Senior Vice President and Chief Financial Officer

So I'll start first with our e-commerce. I mentioned on the call that we were actually able to be less promotional on our e-commerce, which gave us an even more of a gross margin benefit because of all of the natural traffic that we were seeing into the channel. So that was a benefit to us. I would say, from a retailer standpoint, we're not promotional, so we don't really play that game.

And so we -- no, we don't feel any pressure to be any more promotional in that channel.

Tarang Amin -- Chairman and Chief Executive Officer

And a lot of that goes through our business model, yes, which is extraordinary value every day, and that's served us well. And that's really our mission is continue to provide prestige-quality, extraordinary values and not be a high role player or promotionally driven player.

Mandy Fields -- Senior Vice President and Chief Financial Officer

Yes.

Rupesh Parikh -- Oppenheimer and Company -- Analyst

OK, great. Thank you.

Operator

Our next question will come from Mark Astrachan with Stifel. Please go ahead.

Mark Astrachan -- Stifel Financial Corp. -- Analyst

Thanks, and good afternoon, everyone. I wanted to ask about some of the shelf-based gains that you've lined up for Ulta and Walmart for the fall and maybe just directional kind of size of incrementality there. And related to that, what is general receptivity from retail regarding shelf space gains beyond those two retailers, given that e.l.f. has sustained share gains now for quite some time and, obviously, underperformance for most of the larger brands, where a lot of them just seemed to not to be able to get out of their own ways? So does that create more opportunity for you in time? And any sort of broader strokes about how to think about that I think would be helpful.

Tarang Amin -- Chairman and Chief Executive Officer

Yes. So Mark, both Walmart and Ulta Beauty do not want us to give specifics on our space gains. So you'll have to wait till those get set in the fall to get a better sense of those. And hopefully, we could talk in November what we've already said.

It's a subset of both retailers' store counts and picking up space, and you'll be able to see that soon enough. I would say on the receptivity of greater space, shelf space gains beyond those customers, we're having conversations with almost all of our retail customers on increasing space on e.l.f. I think our most established customer, Target, has an average footprint that's at least twice as big as any other customers. There's plenty of room for people to increase space on e.l.f., particularly given our trends and what we have from an innovation standpoint.

Again, I don't have visibility on what 2021 looks like yet in that regard, and we'll probably not be able to provide that until a little bit later in the year once we have some confirmations.

Mark Astrachan -- Stifel Financial Corp. -- Analyst

OK. That's helpful. And maybe sort of a related question that starts less related or will come back related. So just thoughts, in general, on makeup category performance remaining weak.

Obviously, you had touched a bit on some of the uncertainty. But maybe talk about how and under what circumstances that potentially begins to improve. Or is it simple as COVID has to go away before beauty, in particular, to improve? Skincare obviously is performing better. And then back to the previous question on shelf space then, is that generally how retailers are kind of thinking about allocations that would be incremental going forward? Or are they still opportunistic on a brand-level basis where applicable?

Tarang Amin -- Chairman and Chief Executive Officer

Sure. So I'd say the factors on the makeup category, I think, first and foremost, as you outlined, is a return to normalcy post COVID-19. I think that's going to be one of the biggest drivers. We've seen the behavior -- even in the volatility we've seen in our own data, which is in April, our track channel business was way down given the restrictions that were in place and the fears on COVID-19 and going to retail settings.

So I do think some resumption of normalcy will be one of the key catalysts of seeing better trends in makeup. I think the other thing is I'm really hopeful that some of the larger legacy players as they are able to return to launching more products, being able to do more within the category can be good for the category overall. So I've long believed that having some of the larger players also do better from an innovation and consumer engagement standpoint is good for the overall category. We're confident of our ability to continue to gain share no matter what the environment is, whether the category is declining or increasing.

And so I would say that would be the second main piece. And then the third, which relates to both of those, is I do -- if I look at longer-term trends, this is a core category for consumers. And so what you'll see is a shift within the category on those segments that are speaking most to consumers, so whether it'd be the blurring of the lines between skincare and makeup. We've seen really good results on the wellness products, whether it be Cannabis Sativa, CBD collections, Supers and number of those or our core makeup line.

One of the reasons why I believe we're gaining share is our focus on complexion. Poreless Putty Primer is the only product you need to have, whether you were wearing makeup or not, to look great and feel great. Our concealers have a similar outlook as well as many of our other core products. So I think you will see continuously, regardless of where the overall market is, some shifts within the category as well in terms of those categories or subcategories that are speaking more to consumers.

Mark Astrachan -- Stifel Financial Corp. -- Analyst

Got it. That's helpful. Thank you.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Tarang Amin for any closing remarks. Please go ahead.

Tarang Amin -- Chairman and Chief Executive Officer

Well, thank you, everyone, for joining us today. I'm so grateful to my talented teammates for meeting the challenges of this pandemic and building market share. I'm energized by the potential we have with W3LL PEOPLE, and I look forward to sharing more about our new lifestyle beauty brand with Alicia Keys. I fundamentally believe our future is bright.

Of course, we'll continue to be challenged by the environment around us and comping some big months ahead, but I have confidence in our strategy and our team. We look forward to speaking with many of you again at our annual stockholders' meeting on August 27. Thank you, and be well.

Operator

[Operator signoff]

Duration: 71 minutes

Call participants:

Melinda Fried -- Head of Corporate Communications

Tarang Amin -- Chairman and Chief Executive Officer

Mandy Fields -- Senior Vice President and Chief Financial Officer

Erinn Murphy -- Piper Sandler -- Analyst

Andrea Teixeira -- J.P. Morgan -- Analyst

Steph Wissink -- Jefferies -- Analyst

Linda Weiser -- D.A. Davidson -- Analyst

Oliver Chen -- Cowen and Company -- Analyst

Dara Mohsenian -- Morgan Stanley -- Analyst

Bill Chappell -- Truist Securities -- Analyst

Jon Andersen -- William Blair -- Analyst

Rupesh Parikh -- Oppenheimer and Company -- Analyst

Mark Astrachan -- Stifel Financial Corp. -- Analyst

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