Elf Beauty is banking on rural markets and a new partnership with Dollar General to further drive its growth in a challenging U.S. beauty market where consumers are increasingly turning away from expensive products. The Oakland-based company raised its annual sales and profit forecasts, contrasting favorably with established brands like Estee Lauder and L’Oreal that are struggling with weak demand. Accordingly, Elf shares rose 10% in premarket trading. By partnering with Dollar General, Elf plans to sell low-cost products like Lip Oil and Liquid Blush in some stores. The company hopes to reach particularly low-income customers with this step. According to Dollar General, a majority of their stores have the largest focus in suburban areas of Texas, Georgia and North Carolina. Dollar General already offers L’Oreal and CoverGirl products. CEO Tarang Amin emphasized that Elf’s mission is to make beauty accessible to everyone and that the partnership promotes this, as Dollar General has a particular presence in rural areas. Brian Mulberry of Zacks Investment Management sees the partnership as a “symbiotic benefit” because Elf is reaching an untapped market and Dollar General could benefit from awareness of Elf’s products. In recent years, Elf has changed its image from cheaper alternatives to innovative in-house developments and plans to continue expanding into new markets such as Germany and Mexico.
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