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Circana finds prestige and mass are “converging” in the U.S. beauty space as premium-priced brands pace gains at mass retail, while value-priced prestige brands are outperforming their counterparts at the prestige level.
Circana’s point-of-sale data found beauty sales at U.S. mass merchants increased 4% in the first half to $34.6 billion, outpacing the gain in prestige, which grew 2% to $16 billion. During the first quarter, mass beauty sales exceeded prestige for the first time in years.
“The beauty industry’s latest results are indicative of a consumer who is focused on efficacy and elevated value,” said Larissa Jensen, global beauty industry advisor at Circana, in a statement. “Only 14% of U.S. beauty buyers believe that higher prices indicate a better-quality product.”
Among categories, fragrance continued to lead sales gains, up 17% at mass and 6% gain at prestige. Skincare increased 4% at mass versus a 1% decline at prestige, while makeup sales inched up 1%, outperforming a low single-digits decline at mass.
Ulta Shows Strength in Beauty, While E.l.f. Warns of Potential Tariff Impacts
An encouraging sign for beauty’s moment came from Ulta, which last week reported comparable sales in the second quarter climbed 6.7%, more than double analysts’ expectations, and better-than-expected profitability.
“Engagement with beauty and wellness remains healthy,” said Keisha Steelman, Ulta’s CEO on an analyst call. “The growth of The U.S. beauty category has been fairly stable with low single digit growth in mass and mid-single digit growth in prestige beauty during the second quarter according to Circana. Our insight suggests consumers continue to prudently manage their day-to-day spending and are watchful of pricing trends in response to tariffs. At the same time, beauty enthusiasts tell us that they're prioritizing their beauty regimens and remain strongly engaged within the category.”
A more cautious take on beauty’s growth potential came from e.l.f. Beauty, which in early August saw its stock get hit after pulling its full-year forecast due to uncertainty over tariffs. About 75% of e.l.f. products are manufactured in China. E.l.f. beat earnings estimates in the first quarter ended June 30 for the seventh time in eight quarters, but said it was monitoring how its female consumer reacts to a $1 price increase enacted August 1 — only its third price increase in its 21-year history.
Tarang Amin, chairman and CEO, said on an analyst call, “With 75% of e.l.f.'s product portfolio remaining under $10 post increase, our community continues to praise our commitment of making the best of beauty accessible to every eye, lip and face.”
Coty, the parent company of Kylie Cosmetics, Sally Hansen, and others, on August 20 said it expects sales in the current quarter to decline 6% to 8% due to weak spending on beauty in the U.S., retailer destocking, fragrance growth slowing after a strong FY24, and pressure in mass cosmetics.
"Our analysis of cosmetics category weakness points to value-seeking behavior, some fatigue with innovation as consumers circle back to basics and less frequent usage, particularly with Gen-Z migrating to fragrances," finance chief Laurent Mercier said on an analyst call.