Growth Drivers
Q: What drove growth—new or existing distribution?
A: Growth was driven by both new distribution, including Walmart's space expansion, and strength in existing distribution channels. International sales also contributed significantly, with international growth up 91% this quarter.

Consumer Slowdown Impact
Q: Are you seeing consumer slowdown affecting guidance?
A: While there are indications of consumers being more selective, e.l.f. is being chosen by them. The company remains bullish, expecting to continue driving market share growth across channels and international markets.

International Expansion
Q: Can you discuss international growth opportunities?
A: The international strategy focuses on partnering with leading retailers in each market, such as Rossmann in Germany, where e.l.f. will be in over 1,500 doors. This approach has been successful in markets like Italy and the Netherlands.

Guidance Increase
Q: Did you flow through Q1 beat to guidance?
A: The company increased its full-year net sales guidance to 25% to 27% growth, reflecting more than just the Q1 beat and indicating increased confidence in the year's outlook.

Tariff Impact and Pricing
Q: How will potential tariff increases affect pricing?
A: If tariffs rise, similar to 2019, the company plans a balanced approach involving selective pricing, foreign exchange benefits, supplier concessions, and continued diversification of production outside China, which now accounts for less than 80% of sourcing.

Second Quarter Sales Outlook
Q: Why does Q2 sales guidance suggest deceleration?
A: The company expects Q2 sales growth to be slightly above the annual range of 26% to 28%. It maintains a balanced guidance approach, considering the current environment, and continues to see momentum across retailers and channels.

Marketing Investment ROI
Q: What's the ROI on increased marketing spend?
A: Increased marketing investment yields exceptional returns, many multiples above industry benchmarks. It's driving top-line growth, unaided brand awareness, and attracting new customers across demographics.

Inventory Management
Q: How are you managing inventory amid high demand?
A: The company proactively increased inventory levels to support demand, including changes in vendor terms and incorporating Naturium's inventory, ensuring it can meet growth needs.

ERP and Distribution Capacity
Q: What's the status of ERP implementation and distribution expansion?
A: ERP implementation timelines have shifted to the spring to allow thorough testing. Distribution capacity is being expanded in the UK and Asia to support future growth.

Holy Grail Strategy in Skin Care
Q: How does the Holy Grail strategy apply to skin care?
A: The Holy Grail approach is used in both color cosmetics and skin care, with successful products like bronzing drops at $12 versus prestige items at $38. The company is building skin care franchises similar to those in cosmetics.

International Margins
Q: How should investors think about international margins?
A: As international operations scale, margins are expected to be accretive due to the absence of tariffs when importing into these countries, positively impacting overall margins.

Naturium Performance at Ulta
Q: How is Naturium performing at Ulta?
A: While it's early, both e.l.f. and Ulta are pleased with Naturium's performance. The focus is on executing well with existing customers before expanding to additional retailers.

Price Mix Contribution
Q: What's the impact of price mix on growth?
A: Growth continues to be unit-led, with low single-digit price mix contribution from e.l.f. products. Naturium added 16 percentage points to net sales growth this quarter.

Promotional Environment
Q: Are you seeing increased promotions in the market?
A: There is no significant increase in promotions in mass color cosmetics. e.l.f.'s superior value proposition mitigates impacts from competitors' promotions.