elf Beauty Inc (ELF) 2018 Q2 法說會逐字稿

Greetings, and welcome to the e.l.f. Beauty Second Quarter Fiscal 2018 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded.

問候，歡迎來到 e.l.f.美妝 2018 年第二季度財報電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。

I would now like to turn the conference over to your host, Allison Malkin of ICR. Please go ahead, ma'am.

現在我想將會議交給主持人 ICR 的艾莉森·馬爾金 (Allison Malkin)。請繼續，女士。

Good afternoon, everyone. Thank you for joining us today to discuss e.l.f. Beauty's second quarter 2018 earnings results. A copy of today's press release is available in the Investor Relations section of elfcosmetics.com. A recording of the call will also be available for 90 days on elfcosmetics.com.

大家下午好。感謝您今天加入我們討論 e.l.f.美妝2018年第二季度財報。今天新聞稿的副本可在 elfcosmetics.com 的投資者關係部分獲取。通話錄音也將在 elfcosmetics.com 上保留 90 天。

As a reminder, this call contains forward-looking statements that are based on management's beliefs and assumptions, expectations, estimates and projections. These statements, including those relating to the company's fiscal year 2018 outlook, 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 from those expressed or implied by such forward-looking statements 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 presentations and the most directly comparable GAAP measures. Certain brand equity measures cited in this presentation are based on third-party studies. With us from management today are Tarang Amin, Chairman and CEO; and John Bailey, President and CFO. For today's call, Tarang will discuss the business context and action. John will then discuss our financial performance and guidance.

提醒一下，本次電話會議包含基於管理層的信念和假設、期望、估計和預測的前瞻性陳述。這些陳述，包括與公司 2018 財年展望相關的陳述，受到已知和未知的風險和不確定性的影響，因此，實際結果可能存在重大差異。今天的新聞稿和公司向 SEC 提交的文件中詳細介紹了可能導致實際結果與此類前瞻性陳述明示或暗示的結果不同的重要因素。此外，該公司今天的演示文稿還包括基於非公認會計原則（Non-GAAP）的信息。我們建議您參閱今天的新聞稿，以了解非公認會計原則演示文稿與最直接可比的公認會計原則衡量指標之間的差異。本演示文稿中引用的某些品牌資產衡量標準基於第三方研究。今天與我們一起出席的還有管理層的董事長兼首席執行官 Tarang Amin；以及總裁兼首席財務官約翰·貝利 (John Bailey)。在今天的電話會議中，塔朗將討論業務背景和行動。然後約翰將討論我們的財務業績和指導。

It is now my pleasure to turn the call over to Tarang.

現在我很高興將電話轉給塔朗。

Thanks, Allison, and good afternoon, everyone. Our second quarter saw healthy sales growth, operating profit and cash flows. This was on top of 27% net sales growth in the same period last year. We secured additional distribution at Walgreens, launched endcap displays at Rite Aid, started testing skincare at Ulta Beauty and began retail expansion in Germany. Offsetting this progress, we've seen a notable deceleration on our track channel sales. I will review what we're doing to reverse these trends. Before doing so, I'd like to provide context on where we currently stand.

謝謝艾莉森，大家下午好。我們第二季度的銷售、營業利潤和現金流都出現了健康的增長。去年同期淨銷售額增長 27%。我們在 Walgreens 獲得了額外的分銷，在 Rite Aid 推出了端蓋展示，開始在 Ulta Beauty 測試護膚品，並開始在德國進行零售擴張。我們發現軌道渠道銷售顯著減速，抵消了這一進展。我將回顧一下我們正在採取哪些措施來扭轉這些趨勢。在此之前，我想先介紹一下我們目前的處境。

e.l.f. is a 15-year-old brand compared to legacy players that are over 100 years old. We are still young in our brand-building journey and believe we have tremendous whitespace ahead of us. As I reflect on the past 4 years, we've done a number of things well to build competitive advantage. We have a brand that beauty enthusiasts love with the highest value and retention ratings in our category. We have an innovation capability that can launch 100 new items a year in as few as 13 weeks in both color and skincare. We've built a strong distribution base and remain the most productive color cosmetics brand at Target and Walmart on a sales per linear foot basis. Our compelling proposition for retailers continues to get rewarded with new distribution and space. We honed an operational advantage that provides the best combination of cost, quality and speed in our industry, and we've built a great team and infrastructure to further scale the business.

e.l.f.與已有 100 多年曆史的傳統品牌相比，這是一個擁有 15 年曆史的品牌。我們的品牌建設之旅還很年輕，相信我們前面還有巨大的空白。回顧過去四年，我們在建立競爭優勢方面做得很好。我們擁有一個深受美容愛好者喜愛的品牌，在我們的類別中具有最高的價值和保留率。我們擁有創新能力，每年可在短短 13 週內推出 100 種色彩和護膚品新產品。我們已經建立了強大的分銷基礎，並且按每線性英尺銷售額計算，仍然是塔吉特和沃爾瑪最俱生產力的彩妝品牌。我們為零售商提出的令人信服的主張繼續通過新的分銷和空間獲得回報。我們磨練了運營優勢，提供了行業內成本、質量和速度的最佳組合，並且我們建立了一支優秀的團隊和基礎設施來進一步擴大業務規模。

With that backdrop, let me now review the 3 things we're doing to address recent softness in track channels. First, it's time to spend more behind the brand; second, putting more focus on our key items; and third, taking measures to get optimal assortment at retail. Let me take you through each of these. First, it's time to spend more behind the brand. Over the last 4 years, we've grown our community to 37 million followers and have increased unaided awareness from less than 3% to 17% using our authentic and efficient program, such as Beautyscape. As greater the ROI of these activities has been, the marketplace continues to get increasingly crowded and noisy. In the last 18 months, we've seen the growth of multiple mega-influencer-driven brands that are competing for our younger consumer's attention.

在此背景下，現在讓我回顧一下我們為解決近期軌道渠道疲軟問題而採取的三項措施。首先，是時候在品牌背後投入更多資金了；二是突出重點。第三，採取措施優化零售品種。讓我帶您逐一了解這些內容。首先，是時候在品牌背後投入更多資金了。在過去 4 年裡，我們的社區粉絲數量已增至 3700 萬，並通過 Beautyscape 等真實高效的計劃將獨立認知度從不到 3% 提高到 17%。隨著這些活動的投資回報率越來越高，市場繼續變得越來越擁擠和嘈雜。在過去 18 個月中，我們看到多個超級影響力驅動的品牌不斷增長，這些品牌正在爭奪年輕消費者的注意力。

We believe our brand proposition is highly compelling with high quality, extraordinary value and 100% cruelty-free, yet we've not invested enough to communicate our message. We believe now is the natural time to increase investment behind the brand. If you think of our evolution, we've spent the first 4 years building our distribution. We now have a strong footprint that we believe will benefit from increased brand support. We will test broader awareness and engagement efforts in the back half of this year that we can expand in 2019. We intend to fund this investment in part through operating leverage in the business. For example, we're making capital investments in our distribution facilities that we expect to drive labor savings. One of these projects is opening a second distribution center in Ohio to serve our e-commerce business. We expect this facility to reduce our operating costs and enable 2-day standard delivery to 90% of the country. Another project involves bringing similar automation in our West Coast warehouse. We expect these projects to be completed in 2019.

我們相信，我們的品牌主張非常引人注目，具有高品質、非凡價值和 100% 無殘忍，但我們還沒有投入足夠的資金來傳達我們的信息。我們相信現在是增加品牌投資的自然時機。如果您考慮一下我們的發展歷程，就會發現我們花了前 4 年的時間來構建我們的發行版。我們現在擁有強大的影響力，我們相信這將受益於增加的品牌支持。我們將在今年下半年測試更廣泛的意識和參與努力，並在 2019 年擴大。我們打算通過業務的運營槓桿為這項投資提供部分資金。例如，我們正在對配送設施進行資本投資，希望能夠節省勞動力。其中一個項目是在俄亥俄州開設第二個配送中心，為我們的電子商務業務提供服務。我們預計該設施將降低我們的運營成本，並實現向全國 90% 的地區提供 2 天標準配送服務。另一個項目涉及在我們的西海岸倉庫引入類似的自動化。我們預計這些項目將於 2019 年完成。

Second is putting greater focus on key items. We have real strength in innovation, output and speed. We launched over 100 items per year in as fast as 13 weeks. While we're proud of this innovation capability, we have an opportunity to bring greater focus to some of our best items. We have primarily marketed products when we first put them in our direct channels but have not done nearly as good a job when we expanded distribution to our international retailers. Our plan is to bring greater focus to some of our best products and support them with more of a holistic storytelling. As an example, in June, we put focus behind having America's #1 primers. In August, we will put an integrated effort behind Beauty Shield Magnetic Mask. Our $24 Magnetic Mask is a great example of our high quality extraordinary value proposition, and the only other thing like it in the market is a $75 prestige product. You will also see us further amplify our leadership position with America's #1 brushes.

二是更加聚焦重點項目。我們在創新、產量和速度方面擁有真正的實力。我們每年在短短 13 週內推出 100 多種商品。雖然我們為這種創新能力感到自豪，但我們有機會更加關注我們的一些最好的產品。當我們第一次將產品放入直接渠道時，我們主要是對產品進行營銷，但當我們將分銷範圍擴大到國際零售商時，我們的表現卻差強人意。我們的計劃是更加關注我們的一些最好的產品，並通過更全面的故事講述來支持它們。例如，六月，我們將重點放在美國排名第一的引物上。8月，我們將全力推出美盾磁力面膜。我們 24 美元的磁性面膜是我們高品質非凡價值主張的一個很好的例子，市場上唯一類似的產品是 75 美元的信譽產品。您還將看到我們通過美國排名第一的刷子進一步擴大我們的領導地位。

Third is taking steps to get optimal assortment at retail. Each year, we launch new items in our direct channels. We take sales and consumer review data and make assortment recommendation through our national retail partners for their annual shelf resets. We have a strong track record over the past 10 years of driving productivity through this model. This year, we did not have the appropriate mix between new and existing products. Our new products are performing to our expectations, but we saw a greater drop-off in our carryforward items. Given how much our consumers value innovation, it is important to get more of our new items on shelves.

第三是採取措施獲得最佳的零售品種。每年，我們都會在直接渠道中推出新產品。我們獲取銷售和消費者評論數據，並通過我們的全國零售合作夥伴為他們的年度貨架重置提供品種推薦。過去 10 年來，我們在通過此模型提高生產力方面擁有良好的記錄。今年，我們沒有對新產品和現有產品進行適當的組合。我們的新產品的表現符合我們的預期，但我們的結轉產品出現了更大的下降。鑑於我們的消費者對創新的重視，讓更多新產品上架非常重要。

A key enabler to improve our assortment is Project Unicorn. This is a major product, package and shelf initiative that elevates brand presentation and improves navigation. By eliminating and changing outer packaging on select SKUs, this initiative will enable us to fit more new products within existing space. Project Unicorn will also allow us to highlight our premium componentry and colors, showcase our leadership position in category by brushes and primers and tell better product stories. Many of our national retail partners are enthusiastic about the improved space efficiency and presentation Project Unicorn will bring when it hit shelves in the spring of 2019. In summary, we're highly focused on addressing current business trends within track channels. These changes will take some time to fully implement, so we believe it's prudent to revise our 2018 outlook. John will discuss this in more detail later in the call.

獨角獸計劃是改善我們產品種類的關鍵推動者。這是一項主要的產品、包裝和貨架計劃，旨在提升品牌展示並改善導航。通過消除和改變特定 SKU 的外包裝，這一舉措將使我們能夠在現有空間內安裝更多新產品。獨角獸計劃還將使我們能夠突出我們的優質組件和顏色，通過刷子和底漆展示我們在該類別中的領導地位，並講述更好的產品故事。我們的許多全國零售合作夥伴都對“獨角獸計劃”在 2019 年春季上架時所帶來的空間效率和展示效果的改善充滿熱情。總之，我們高度重視解決軌道渠道內當前的業務趨勢。這些變化需要一些時間才能完全實施，因此我們認為修改 2018 年展望是謹慎的做法。約翰將在稍後的電話會議中更詳細地討論這一點。

Importantly, the current challenges have not dampened our enthusiasm for the long-term potential of the e.l.f. brand. Speaking both personally and as the second largest shareholder in the company, I have tremendous confidence in our ability to leverage the platform that we've assembled to provide value. To that end and as announced today, my plan is to purchase an additional $0.5 million of e.l.f. shares. My ownership stake is over 12% of the company, and I have purchased 92% of my shares. Our entire team is highly aligned to delivering long-term shareholder value.

重要的是，當前的挑戰並沒有削弱我們對 e.l.f. 長期潛力的熱情。品牌。就我個人而言，以及作為公司第二大股東而言，我對我們利用我們組建的平台提供價值的能力充滿信心。為此，正如今天宣布的，我的計劃是額外購買 50 萬美元的 e.l.f.分享。我擁有公司12%以上的股權，並且我已經購買了92%的股份。我們的整個團隊高度致力於實現長期股東價值。

My confidence is further bolstered by the wins we continue to get in the competitive marketplace. Even with recent trends, we remain the most productive brand on a sales per linear foot basis at our 2 largest customers, Walmart and Target. Our beauty expansion has exceeded our expectations, and we recently started testing skincare in a subset of their stores. We offer a compelling retailer proposition and continue to gain distribution and shelf space. As previously announced, we are expanding into additional Walgreens stores. We are also pleased to announce that we'll be broadening distribution to Rite Aid, initially with an endcap display program this year and in-line distribution to follow in 2019.

我們在競爭激烈的市場中不斷取得的勝利進一步增強了我的信心。即使考慮到最近的趨勢，我們仍然是沃爾瑪和塔吉特這兩個最大客戶中每線性英尺銷售額最高的品牌。我們的美容擴張超出了我們的預期，我們最近開始在他們的一部分商店測試護膚品。我們提供令人信服的零售商主張，並繼續獲得分銷和貨架空間。正如之前宣布的，我們正在擴展到更多的沃爾格林商店。我們還很高興地宣布，我們將擴大 Rite Aid 的分銷範圍，首先是今年的端蓋展示計劃，然後是 2019 年的在線分銷。

The brand continues to resonate internationally with expansion into additional Superdrug stores slated this year and the launch into Feelunique, the largest beauty e-tailer in the U.K. We are beginning our initial distribution in Germany with a subset of Müller stores. Douglas, a major European retailer, launched e.l.f. online in Germany and will test in a subset of their retail doors, an approach similar to that of Ulta Beauty in the U.S. While many of these developments do not significantly impact 2018 revenue, they show the power of our brand and continue to gain space and distribution.

該品牌計劃於今年擴張至更多 Superdrug 商店，並推出英國最大的美容電子零售商 Feelunique，繼續在國際上引起共鳴。我們正在德國通過部分 Müller 商店開始初步分銷。歐洲主要零售商道格拉斯 (Douglas) 推出了 e.l.f.我們將在德國線上進行測試，並將在部分零售店進行測試，這種方法與美國的Ulta Beauty 的做法類似。雖然其中許多發展並未對2018 年收入產生重大影響，但它們展示了我們品牌的力量，並繼續贏得空間和分配。

I'll now turn it over to John to discuss our financial results and 2018 outlook.

我現在將其交給 John，討論我們的財務業績和 2018 年展望。

Thanks, Tarang. For the second quarter, net sales increased 6% to $59 million, primarily driven by sales growth in select national retailers. Gross margin was 62%, in line with expectations. The variance to prior year was driven primarily by unfavorable movements in foreign exchange rates, partially offset by margin accretive innovation.

謝謝，塔朗。第二季度淨銷售額增長 6%，達到 5,900 萬美元，這主要是由特定國家零售商的銷售增長推動的。毛利率為62%，符合預期。與上一年的差異主要是由外匯匯率的不利變動造成的，但部分被利潤增值創新所抵消。

On an adjusted basis, SG&A as a percentage of sales was 49% compared to 52% of net sales in the same period in fiscal 2017, largely driven by timing. Adjusted EBITDA increased 29% to $13 million from $10 million in the second quarter of 2017. Adjusted net income decreased to $6.5 million or $0.13 per diluted share compared to adjusted net income of $7.3 million or $0.15 per diluted share in the same quarter of 2017. We continue to optimize our inventory levels and are happy with the progress made throughout the quarter.

調整後的銷售、管理及行政費用 (SG&A) 佔銷售額的百分比為 49%，而 2017 財年同期占淨銷售額的 52%，這主要是受時機的影響。調整後 EBITDA 增長 29%，從 2017 年第二季度的 1000 萬美元增至 1300 萬美元。調整後淨利潤下降至 650 萬美元，即稀釋後每股 0.13 美元，而 2017 年同一季度調整後淨利潤為 730 萬美元，即稀釋後每股 0.15 美元。我們繼續優化庫存水平，並對整個季度取得的進展感到滿意。

Turning to our outlook. Accounting for current trends within select national retailer partners, we are revising our expectations for 2018. We now project net sales growth in the low single digits, adjusted EBITDA of $58 million to $62 million, adjusted net income of $28 million to $31 million and adjusted diluted EPS of $0.56 to $0.61 on 50.4 million fully diluted outstanding shares. Our guidance contemplates Nielsen data to show average declines of approximately 10% through year-end.

轉向我們的展望。考慮到特定國家零售商合作夥伴的當前趨勢，我們正在修改 2018 年的預期。我們現在預計淨銷售額增長為低個位數，調整後EBITDA 為5800 萬美元至6200 萬美元，調整後淨利潤為2800 萬美元至3100 萬美元，調整後攤薄每股收益為0.56 美元至0.61 美元（5040 萬股完全稀釋流通股）。我們的指引考慮到尼爾森數據顯示，到年底平均下降約 10%。

While we have not historically provided quarterly guidance, we believe it's prudent to provide added context on our expectations for the next couple of quarters. At a high level, we expect company sales in the second half of 2018 to be flat to slightly down, with declines in Q3 partially offset by gains in Q4. While our international and direct businesses are expected to be positive contributors, the significant variances are driven by national retailers, which is where I will focus my commentary.

雖然我們歷來沒有提供季度指導，但我們認為，為我們對未來幾個季度的預期提供更多背景信息是謹慎的做法。從較高水平來看，我們預計 2018 年下半年公司銷售額將持平或略有下降，其中第三季度的下降將被第四季度的增長部分抵消。雖然我們的國際和直接業務預計將做出積極的貢獻，但顯著的差異是由國家零售商推動的，這也是我將重點評論的地方。

As you will recall, the third quarter of last year demonstrated strong sales growth of 28%. We are now lapping several items from that quarter, including the early shipment of a portion of our Target holiday program, pipeline for Walmart and CVS space expansion and higher sales to discounters. These items are expected to create a drag on growth in the mid- to high teens in addition to our assumption for track channel trends. These impacts are being partially offset by the growth of our Specialty business, including Ulta, which we expect to contribute high single-digit growth. We anticipate that the net of all of these effects will result in Q3 sales to decline in the mid- to high teens on a year-over-year basis.

您可能還記得，去年第三季度的銷售強勁增長了 28%。我們現在正在對該季度的幾項項目進行評估，包括提前發貨部分 Target 假期計劃、沃爾瑪和 CVS 空間擴張的管道以及對折扣店的更高銷售額。除了我們對跟踪渠道趨勢的假設之外，這些項目預計還會拖累中高青少年的增長。這些影響被我們的特種業務（包括 Ulta）的增長所部分抵消，我們預計該業務將貢獻高單位數增長。我們預計，所有這些影響的淨值將導致第三季度銷售額同比下降十位數至十幾位數。

For the fourth quarter, we expect track channel trends to be partially offset by higher holiday sales at Target and pipeline for Rite Aid. We also anticipate growth in our Specialty business, though the contribution to growth is muted as we shift our pipeline for full distribution to Ulta in Q4 of 2017. We anticipate that the net of these effects is sales growth in Q4 of 2018 in the mid- to high single digits. Though it is far too early to discuss our 2019 outlook, we believe that while we are focused in many of the right areas to address current trends, many of these initiatives will take time. As a result, as of now, we would expect low growth in 2019.

對於第四季度，我們預計軌道渠道趨勢將被塔吉特 (Target) 假日銷售的增加和 Rite Aid 的管道銷售部分抵消。我們還預計我們的特種業務會增長，儘管隨著我們在 2017 年第四季度將全面分銷渠道轉移到 Ulta，對增長的貢獻會減弱。我們預計，扣除這些影響後，2018 年第四季度的銷售額將實現中高個位數增長。儘管現在討論我們 2019 年的前景還為時過早，但我們相信，雖然我們專注於許多正確的領域來應對當前的趨勢，但其中許多舉措都需要時間。因此，截至目前，我們預計 2019 年將出現低增長。

Beyond our outlook, there has been quite a bit of discussion on the topic of tariffs. While it is yet to be seen where tariffs land, our initial plan would be to mitigate the impact through a combination of select pricing actions, negotiation with our suppliers and global sourcing efforts on a portion of our line. In addition, we believe that potential exists for advantageous moves in the U.S. dollar to RMB exchange rate that could help to offset the impact. We continue to closely monitor the evolving policy and our final plan will dependent -- will be dependent on how the tariffs ultimately land.

除了我們的展望之外，還有很多關於關稅話題的討論。雖然關稅將在何處落地尚不清楚，但我們的初步計劃是通過選擇性定價行動、與供應商談判以及部分產品線的全球採購工作相結合來減輕影響。此外，我們認為美元兌人民幣匯率存在有利走勢，有助於抵消影響。我們將繼續密切關注不斷變化的政策，我們的最終計劃將取決於關稅最終如何落地。

In summary, e.l.f. is a beloved brand with a strong track record and a talented team that is intently focused on meeting the needs of our beauty enthusiast consumers. The strength of our retail proposition is evident by the continued expansion of e.l.f. into new distribution in both the U.S. and abroad. We are highly focused on addressing current trends and delivering shareholder value.

總而言之，e.l.f.是一個深受喜愛的品牌，擁有良好的業績記錄和一支才華橫溢的團隊，專注於滿足美容愛好者消費者的需求。e.l.f. 的持續擴張證明了我們零售主張的實力。在美國和國外進行新的發行。我們高度關注當前趨勢並提供股東價值。

With that, I would like to now ask the operator to open the call for questions.

現在，我想請接線員開始提問。

(Operator Instructions) We have a question from Steph Wissink, Jefferies.

（操作員說明）我們有來自 Jefferies 的 Steph Wissink 的問題。

John, I just wanted to follow up on the inventory comments. I think you mentioned you're pleased with the progress there. It looks like inventories, they are down, about in line with your third quarter comment on guidance. So can you give us some insight into the complexion of the inventory that you currently hold? Is that also consistent with the key item strategy in some of the brand investment you're going to make in the back half?

約翰，我只是想跟進庫存評論。我想你提到你對那裡的進展感到滿意。看起來庫存有所下降，與您對第三季度指導的評論大致一致。那麼您能否向我們介紹一下您目前持有的庫存情況？這是否也與你們下半年要進行的一些品牌投資的主打策略是一致的？

Yes, Steph. So yes, we have been quite pleased with our inventory levels, obviously, a topic of discussion a year or so ago and have really brought those in line as expected. We're happy with the composition of inventory relative to what we see coming, including the launch of Project Unicorn, which Tarang can speak to more broadly, but does involve a different packaging system. So we're happy with where those sit.

是的，斯蒂芬。所以，是的，我們對我們的庫存水平非常滿意，顯然，這是大約一年前討論的話題，並且確實使這些水平符合預期。我們對與我們預計的未來相關的庫存構成感到滿意，包括獨角獸項目的啟動，塔朗可以更廣泛地談論該項目，但確實涉及不同的包裝系統。所以我們對這些人的位置感到滿意。

Next question is from Oliver Chen, Cowen and Company.

下一個問題來自 Cowen and Company 的 Oliver Chen。

This is Ross on for Oliver. In terms of just the Project Unicorn initiative, just taking a step back, how are you guys thinking about kind of optimizing the mix between new and existing products?

這是羅斯替奧利弗上場。就獨角獸計劃而言，退後一步，你們如何考慮優化新產品和現有產品之間的組合？

Sure. So I'd say real focus within Project Unicorn. One of the reasons I'm really excited about it is it really has 4-key benefits. First is to take some of the products out of their kind of black packaging to allow us to better showcase our premium componentry and color. Our primers are a big example where we -- getting these out of the box improves their kind of premium communication. The second is a much more flexible product and shelving approach, where Unicorn allows products to fit on shelves or hang in pegs. But probably the most important as it relates to new products is greater shelf efficiency. We're able to fit more products into existing space. So if you think about it, our retailers will be able to take more of our new products into even their existing space, and so it helps that mix in terms of new versus kind of carryforward items, and at the same time, allows for a better communication on shelf and a better navigation as well, including some of the core areas of product strength that we have. So in total, we believe Unicorn will be an important step forward in terms of really getting that optimal assortment on shelf.

當然。所以我想說獨角獸計劃才是真正的焦點。我對它感到非常興奮的原因之一是它確實具有 4 個關鍵優勢。首先是取消一些產品的黑色包裝，以便我們更好地展示我們的優質組件和顏色。我們的引物就是一個很好的例子，我們將它們開箱即用，可以改善他們的優質溝通。第二種是更靈活的產品和貨架方法，Unicorn 允許產品放在貨架上或掛在釘子上。但對於新產品而言，最重要的可能是更高的貨架效率。我們能夠在現有空間中容納更多產品。因此，如果您考慮一下，我們的零售商將能夠將更多的新產品帶入他們現有的空間，因此這有助於將新產品與結轉產品進行混合，同時允許更好的貨架溝通和更好的導航，包括我們擁有的一些核心產品優勢領域。因此，總的來說，我們相信 Unicorn 將在真正將最佳品種上架方面向前邁出重要一步。

Got it. Okay. That's helpful. And then secondly, with regard to the savings, the operating leverage savings. Just curious if it goes beyond just the labor optimization or if you could just provide more detail there, also with regard to timing, that would be helpful.

知道了。好的。這很有幫助。其次，關於節省，運營槓桿節省。只是好奇它是否超出了勞動力優化的範圍，或者您是否可以在那裡提供更多細節，以及時間方面的細節，這會有所幫助。

Sure, happy to. So if you look over the last few years, we've been reinvesting a lot of our operating leverage savings back into the business, and we talked quite a bit about the areas of those investments have been going into historically people and infrastructure, and then to an increasing level, brand over the course of the last few quarters. We see a great opportunity to continue putting additional dollars against the brand, and as Tarang mentioned, really want to ramp those efforts up into 2019. In addition to the natural operating leverage that we do have inherent in our business, we're also pursuing a couple of initiatives to free that up even further. And Tarang mentioned a couple of them, which really relate to capital investment in a couple of our warehousing and logistics facilities. The first actually requires no capital outlay on our own. It's a facility in Ohio for our e-com business, which not only will free up some savings but will also allow us to get to 2-day delivery as consumer expectations have continued to get greater with the rise of players like Amazon. And then the other is in our West Coast facility, where we will be putting capital on the floor that will generate significant labor savings. The latter of that, those 2 projects is the more significant in terms of the actual dollars that are freed up and are likely to be complete by the middle of 2019.

當然，很高興。因此，如果你回顧一下過去幾年，我們一直在將大量運營槓桿儲蓄重新投資到業務中，並且我們談論了很多關於這些投資領域的內容，這些投資歷來都涉及人員和基礎設施，然後在過去幾個季度中，品牌的知名度不斷提高。我們看到了繼續為該品牌投入更多資金的絕佳機會，正如 Tarang 提到的，我們真的希望在 2019 年繼續加大力度。除了我們業務中固有的自然運營槓桿之外，我們還採取了一些舉措來進一步釋放這種槓桿。塔朗提到了其中的幾個，這確實與我們的幾個倉儲和物流設施的資本投資有關。第一個實際上不需要我們自己的資本支出。這是我們電子商務業務在俄亥俄州的一個工廠，這不僅可以節省一些成本，而且還可以讓我們實現 2 天送達，因為隨著亞馬遜等企業的崛起，消費者的期望不斷提高。另一個是在我們的西海岸工廠，我們將在那裡投入資金，這將節省大量勞動力。就釋放的實際資金而言，這兩個項目更為重要，並且可能會在 2019 年中期完成。

Next question is from Linda Bolton-Weiser, D.A. Davidson

下一個問題來自檢察官 Linda Bolton-Weiser。戴維森

So in terms of your projection or expectation of Nielsen decline of 10% for the remainder of the year, how much of that is category decline versus share losses, I guess, by you?

因此，就您對尼爾森在今年剩餘時間內下降 10% 的預測或預期而言，我猜您認為其中類別下降與份額損失的比例是多少？

Linda, it's John. So in terms of the assumption for the balance of the year, we have said it's an average of negative 10% for the remainder. And I think the most recent periods have come inside of that. Certainly, I think there will be a category impact. We've talked quite a bit about what we've seen in mass color and some of the drivers. And as a key player on mass color, not immune to things that are happening in the category. As far as how share is expected to play out, that's largely dependent on factors that are beyond our control. So it's a bit difficult to forecast that at the moment, but those are how we're thinking about the assumption for the balance of the year, which would be a combination of the 2.

琳達，這是約翰。因此，就今年剩餘時間的假設而言，我們說過剩餘時間的平均增長率為負 10%。我認為最近的時期已經在其中。當然，我認為這將會產生類別影響。我們已經討論了很多關於我們在大眾色彩和一些驅動程序中所看到的內容。作為大眾色彩的關鍵參與者，也不能倖免於該類別中發生的事情。至於份額預計如何發揮，這在很大程度上取決於我們無法控制的因素。因此，目前預測這一點有點困難，但這就是我們如何考慮今年剩餘時間的假設，這將是兩者的組合。

And then just long term, when you talk about investing more behind the brand, just in a very long term kind of big picture way, do you think that your advertising ratio has to double from where it is now from the 3% level? Or triple to 9%? Or what are kind of your long-term thinking about where that ratio needs to go?

然後，從長遠來看，當您談到在品牌背後投入更多資金時，從長遠來看，您是否認為您的廣告比例必須從現在的 3% 水平增加一倍？還是三倍到 9%？或者您對這個比率需要走向何方的長期思考是什麼？

Yes. So we haven't pegged where the long-term ratio needs to be. Our approach is very much kind of an ROI-driven approach. So a lot of what I talked about is -- if you look at our approach, it's first and foremost, we have some high ROI activities that we will double down, first and foremost. And the second thing we do is we test quantitatively few of our other tactics and see where we're getting the greatest returns. So we do not believe -- we kind of contrast our 3% to sometimes legacy players that are over 20-some percent. We don't believe we'll ever get to that level, but we do believe more than 3% makes sense, and I think they'll be guided by what we're seeing in terms of return.

是的。所以我們還沒有確定長期比率需要在哪裡。我們的方法在很大程度上是一種投資回報率驅動的方法。所以我談到的很多內容是——如果你看看我們的方法，首先也是最重要的是，我們有一些高投資回報率的活動，我們將加倍努力。我們做的第二件事是對我們的其他策略進行定量測試，看看我們在哪裡獲得了最大的回報。所以我們不相信——我們將 3% 的玩家與有時超過 20% 的傳統玩家進行了對比。我們不相信我們會達到這個水平，但我們確實相信超過 3% 是有意義的，而且我認為他們會以我們所看到的回報為指導。

And just finally, can you just clarify. In terms of the 2,000 stores, additional stores at Walgreens that you're gaining, are those the Rite Aid stores that are being acquired by Walgreens? Or are those Walgreen-branded stores?

最後，你能澄清一下嗎？就 2,000 家商店而言，您獲得的沃爾格林 (Walgreens) 的其他商店是那些被沃爾格林 (Walgreens) 收購的 Rite Aid 商店嗎？或者那些是沃爾格林品牌的商店？

So with the -- what we've previously announced is we're picking up additional doors at Walgreens. So we've been in Walgreens, and we actually shipped pipeline for Walgreens in Q4 of last year, and those are Walgreen banner stores. In addition, we are broadening distribution to Rite Aid stores, and we're doing that first through and endcap program, a display program for this year, followed by inline distribution in 2019. So you'll get both Walgreens as well as Rite Aid.

因此，我們之前宣布的是，我們將在沃爾格林開設更多門店。所以我們一直在沃爾格林，我們實際上在去年第四季度為沃爾格林運送了管道，這些都是沃爾格林的旗幟商店。此外，我們正在將分銷範圍擴大到 Rite Aid 商店，我們正在進行首個終端計劃（今年的展示計劃），然後在 2019 年進行內聯分銷。因此，您將同時獲得 Walgreens 和 Rite Aid。

And how does that go along with the acquisition of Rite Aid by Albertsons?

這與 Albertsons 收購 Rite Aid 有何關係？

So you will -- in that, you will have some -- certainly, you'll have some Rite Aid stores that Walgreens has acquired that will go to Walgreens, and you'll have others that are kind of stand-alone. Both, we see as kind of viable going forward.

所以你會——在那方面，你會有一些——當然，你會有一些沃爾格林收購的 Rite Aid 商店，這些商店將歸沃爾格林所有，你還會有其他一些獨立的商店。我們認為這兩者都是可行的。

The next question is from Wendy Nicholson, Citi.

下一個問題來自花旗集團的溫迪·尼科爾森。

My question -- my first question is about the incremental marketing spending that you're talking about. And I'm sorry if I didn't pick this up in your comments. But is it going to be traditional advertising? Is it going to be digital media? Is it going to be more promotion in store? What's you're thinking about that right now?

我的問題——我的第一個問題是關於你所說的增量營銷支出。如果我沒有在您的評論中註意到這一點，我很抱歉。但這會是傳統廣告嗎？會是數字媒體嗎？店裡會不會加大促銷力度？你現在在想什麼？

Sure. So Wendy this is Tarang. The first component is -- some of the tactics that we already like and have good ROI against. So if I think about Beautyscape influencer program, we've had great results in terms of reaching their communities and the amount of reach that we get through that program, putting more behind Beautyscape and other influencer efforts that we believe we can continue to build an authentic community. Second is we have a number of digital efforts that we're also seeing pretty good returns on that we would put more investment behind. And then third, I'd say, is testing other approaches. So we have, for example, I mentioned our overall message on extraordinary value and high quality as well as 100% cruelty-free, having some messaging that we put into kind of video -- digital video and kind of broader -- and testing kind of broader awareness, building tactics that way as well as sampling. So there's a number of -- and we've always been a test-and-learn brand that we will test and see where we get the greatest return and kind of allocate dollars against those activities.

當然。溫迪，這是塔朗。第一個組成部分是一些我們已經喜歡並且具有良好投資回報率的策略。因此，如果我考慮Beautyscape 影響者計劃，我們在接觸他們的社區以及通過該計劃獲得的影響力方面取得了巨大的成果，為Beautyscape 和其他影響者的努力提供了更多支持，我們相信我們可以繼續建立一個真實的社區。其次，我們進行了許多數字化工作，我們也看到了相當不錯的回報，因此我們將投入更多投資。我想說，第三是測試其他方法。例如，我提到了我們關於非凡價值、高品質以及 100% 無殘忍的總體信息，我們將一些信息放入視頻（數字視頻和更廣泛的視頻）和測試類型中更廣泛的認識，以這種方式制定策略以及採樣。所以有很多——我們一直是一個測試和學習的品牌，我們將測試並看看我們在哪裡可以獲得最大的回報，並為這些活動分配資金。

And do you feel like -- in the first part of that, the spending more behind the beauty influencers, et cetera, do you feel like there is a waning of support on their part such that you feel pressure to spend more? Is it just that you think there's an opportunity to sort of accelerate the momentum of their enthusiasm, if you will?

你是否覺得——在第一部分中，在美容影響者背後花費更多的錢等等，你是否覺得他們的支持正在減弱，以至於你感到有壓力去花更多的錢？是否只是您認為有機會加速他們的熱情勢頭（如果您願意的話）？

Yes. No, we believed -- I mean, first of all, we've had great results behind our own Beautyscape program on influencers. So the first thing that gives us confidence is we've seen some momentum there. The second is the marketplace is crowded, and we've seen a number kind of mega-influencer-driven brands that have even higher reach. So in the face of kind of, I call it, that noise or people looking for attention from our consumers, making sure we're making enough of a voice there. And then to your previous question on kind of marketing tactics, the one place that we are not looking to put money against is promotional support. We have an extraordinary value as it is, so what we're really talking about is equity building kind of marketing for both the short as well as long term.

是的。不，我們相信——我的意思是，首先，我們針對影響者的 Beautyscape 計劃取得了巨大的成果。因此，給我們信心的第一件事是我們看到了一些勢頭。第二個是市場很擁擠，我們已經看到了許多具有更大影響力的超級影響力驅動的品牌。因此，面對我所說的那種噪音或尋求消費者關注的人，確保我們在那裡發出足夠的聲音。對於您之前關於營銷策略類型的問題，我們不希望投入資金的一個地方是促銷支持。我們擁有非凡的價值，所以我們真正談論的是短期和長期的股權建設營銷。

And I think -- Wendy, it's John. The only other thing that I would add -- just kind of back to other things we're seeing in the category. For a long time, we really prided ourselves on our authentic and community-driven tactics and the fact that we didn't pay influencers at all. And I think that was a good kind of guide for us as a brand. Yet at the same time, we do think there's an opportunity to spend a little money and do it in a way that really does come forward as authentic and the way that our e.l.f. consumer would want to see us show up. In that increasingly noisy world, not being afraid to participate in the right way is something that we should be thinking a lot about.

我想——溫迪，是約翰。我要補充的唯一一件事——有點回到我們在該類別中看到的其他事情。很長一段時間以來，我們都為我們真實的、社區驅動的策略以及我們根本不支付影響力的事實感到自豪。我認為這對我們作為一個品牌來說是一個很好的指南。但與此同時，我們確實認為有機會花一點錢，並以一種真正真實的方式來做這件事，就像我們的精靈那樣。消費者希望看到我們出現。在這個日益喧鬧的世界裡，不害怕以正確的方式參與是我們應該深思的事情。

Got it. And then just one question on your pricing strategy, the $24, I think you said it was a mask, but is a lot cheaper than the $75 alternative. But are you finding any confusion or any feedback in the market as you launched some more premium-priced products and you kind of get off that specific $3 peg?

知道了。然後只有一個關於你們定價策略的問題，24 美元，我想你們說這是一個面具，但比 75 美元的替代品便宜很多。但是，當您推出一些價格更高的產品並且擺脫 3 美元的固定價格時，您是否發現市場上存在任何混亂或任何反饋？

Yes. Well, the key for us is to innovate across all price points, including opening price point. I mean, I think one of the items I feel most enthusiastic about is our $2 brow pencil. It's the #1 brow pencil in America. It's a phenomenal item. And so I think the key for us is it's not any particular price point but making sure we offer an extraordinary value in anything that we introduce, and that includes in the opening price point. You'll continue to see that be an important focus of ours and making sure that we have those items that consumers want even at those low price points.

是的。嗯，對我們來說關鍵是在所有價位上進行創新，包括開盤價。我的意思是，我認為我最感興趣的商品之一是我們的 2 美元眉筆。這是美國排名第一的眉筆。這是一個了不起的項目。因此，我認為對我們來說關鍵不是任何特定的價格點，而是確保我們推出的任何產品都具有非凡的價值，包括在開盤價格點中。您將繼續看到這是我們的一個重要關注點，並確保我們即使在低價位也能提供消費者想要的商品。

Got it. And then my very last question, and I appreciate you being patient with me. The Ulta skincare product, is that incremental shelf space? Or the product you said that is in test at some Ultas, is that an incremental shelf space? Or is that in your standard set of beauty that's already at Ulta?

知道了。然後是我的最後一個問題，感謝您對我的耐心。Ulta 護膚品是否會增加貨架空間？或者你說的在一些 Ultas 測試的產品，是增量的貨架空間嗎？或者這就是你在 Ulta 已經擁有的美麗標準嗎？

So the Ulta test is in an incremental space. It's in their skincare space, and we're testing on a subset of their doors. Broadly and other places, we typically prefer having skincare within our overall e.l.f. set. We like that approach better, but they were so excited about our skincare, in particular our innovation pipeline, that we said let's get this a try, and we'll continue from there.

所以Ulta測試是在增量空間。這是在他們的護膚空間裡，我們正在他們的一部分門上進行測試。從廣義上講，在其他地方，我們通常更喜歡在我們的整體 e.l.f. 中進行護膚。放。我們更喜歡這種方法，但他們對我們的護膚品，特別是我們的創新管道非常興奮，我們說讓我們嘗試一下，我們將從那裡繼續。

We have a question from Mr. Bill Chappell, SunTrust.

SunTrust 的 Bill Chappell 先生向我們提出了一個問題。

Just trying to be straightforward. And if we look at your -- at least your track standard data over the past 18 months, it's been decelerating and pretty much consistently for 18 months. And as we've asked, and there have been investor concern on the calls, you've both been fairly, dismissive, things were on track. So I'm just trying to understand, I guess, first, what's changed too much where you felt like we need to put a big plan in place? Was it sales finally started to decline in tracked channels? What changed in your head? And then two, how do we get comfortable that this decision to try to arrest that whole change isn't 6 months too late? I mean, it's, boy, we should've been doing this a long time ago, and now it's going to take that much longer to get sales going the right direction.

只是想簡單明了。如果我們看看過去 18 個月的跟踪標準數據，就會發現它一直在減速，並且在 18 個月裡幾乎一直在減速。正如我們所詢問的，並且投資者對電話會議表示擔憂，你們都表現得很公平，不屑一顧，事情正在步入正軌。所以，我想，首先，我想了解一下，是什麼改變了太多，讓您覺得我們需要製定一個宏偉的計劃？追踪渠道的銷量終於開始下降了嗎？你的頭腦發生了什麼變化？第二個問題，我們如何才能放心，這個試圖阻止整個變革的決定還不算晚了 6 個月？我的意思是，天哪，我們很久以前就應該這樣做了，但現在需要更長的時間才能讓銷售朝著正確的方向發展。

Sure, Bill. This is Tarang. So I would say the biggest change is we saw that deceleration that you've seen even more dramatically over the last, I would call it, 8 to 10 weeks. And so as we took a look at our plan, it did actually surprise us relative to what our initial expectations were even when we kind of talked about 6% to 8%. We had kind of an algorithm between kind of where we expected tracked sales to be versus non-tracked, and so that was a surprise. I'd say in terms of the actual actions that we're taking, a number of these we believe are the right things not only for the short but long term. I think, I mean, we've talked for a while now wanting to invest more in the brand, and I think it's part of our natural evolution as we spend a lot of time kind of building a sufficient enough distribution base. We think that being able to spread that marketing across that distribution base will be even more effective. Same with the key items, Bill, because I think that was probably one of the learnings from this year, is we've seen some others do a pretty good job getting after key items. We launch so many things that sometimes some of our key items get lost in everything that we launch in doing a better, more concerted effort, particularly when things get to national retailers. And then finally, the optimization process. That's continual. Every single year, we'll go through that, and we'll learn things in terms of what the right mix is between new products and our existing products as we go through. So I don't -- I would say in many of our actions, it isn't like we're picking completely new topics. It's more of putting greater intensity behind them, mainly based on what we're seeing some of the tracked data.

當然，比爾。這是塔朗。所以我想說，最大的變化是我們看到了過去 8 到 10 週更加顯著的減速。因此，當我們審視我們的計劃時，即使我們談論的是 6% 到 8%，相對於我們最初的預期，它確實讓我們感到驚訝。我們在預期跟踪銷售與非跟踪銷售之間有一種算法，所以這是一個驚喜。我想說的是，就我們正在採取的實際行動而言，我們認為其中一些行動不僅在短期而且長期都是正確的。我想，我的意思是，我們已經討論了一段時間，希望對品牌進行更多投資，我認為這是我們自然演變的一部分，因為我們花了很多時間來建立足夠多的分銷基礎。我們認為，能夠將營銷傳播到整個分銷基地將會更加有效。比爾，與關鍵項目相同，因為我認為這可能是今年的教訓之一，我們已經看到其他一些人在關鍵項目上做得很好。我們推出了太多的產品，有時我們的一些關鍵產品會在我們推出的所有產品中丟失，以做出更好、更協調的努力，特別是當產品到達全國零售商時。最後是優化過程。這是持續不斷的。每一年，我們都會經歷這個過程，並且我們會在經歷過程中了解到新產品和現有產品之間的正確組合。所以我不會——我想說，在我們的許多行動中，我們並不是在選擇全新的話題。這更多的是加大力度，主要基於我們看到的一些跟踪數據。

Okay. And then just switching to looking at the tracked data. Is there a risk as we move into 2019 that some of the share gains or shelf space gains you've had over the past couple days -- couple years get scaled back just because you're running negative comps in the stores? Or do you feel comfortable that, that's there to stay?

好的。然後只是切換到查看跟踪數據。當我們進入 2019 年時，是否存在這樣的風險：您在過去幾天甚至幾年內獲得的一些份額收益或貨架空間收益會因為您在商店中進行負面競爭而縮減？或者你覺得留在那裡很舒服嗎？

Yes. So what I'd tell you on those, if I just take a look at like where we picked up some of the most space, Target and Walmart. We have a history of 25 years working with both of them. And the key currency with both of them is the combination of what consumer are you bringing to my stores, what's your innovation pipeline and how productive are you. Even with recent trends, we remain the most productive brand that Target and Walmart carry on a linear -- on a sales per linear foot basis. So our overall strength relative to category is really quite strong. The other thing I would tell you is when I look at from a competitive standpoint, there are some competitors that had years of sustained kind of issues before action was taken. We certainly do not intend to be in that position. We take very seriously both our relationship with these customers as well as our role in helping them grow in their category. And so I feel really good about kind of the plans we have going forward with both Walmart and Target, particularly resting as we've shared kind of Project Unicorn and what that can bring in terms of getting more of our new products on the shelves, other things that we can do with them kind of as we continue to partner. So I feel good both in terms of where we stand and our overall productivity but, more importantly, in terms of what our future plans are with them.

是的。那麼，如果我看看我們在哪些地方獲得了最大的空間，塔吉特和沃爾瑪，我會告訴你這些。我們與他們已有 25 年的合作歷史。兩者的關鍵在於你為我的商店帶來了哪些消費者、你的創新渠道是什麼以及你的生產力如何。即使從最近的趨勢來看，我們仍然是塔吉特和沃爾瑪的線性（每線性英尺銷售額）中最俱生產力的品牌。所以我們相對於品類的整體實力確實是相當強的。我要告訴你的另一件事是，當我從競爭的角度來看時，有些競爭對手在採取行動之前已經存在多年持續的問題。我們當然不打算處於這種境地。我們非常重視與這些客戶的關係以及我們在幫助他們在其類別中成長的角色。因此，我對我們與沃爾瑪和塔吉特共同推進的計劃感到非常滿意，特別是我們已經分享了獨角獸計劃，以及這可以為我們的更多新產品上架帶來什麼，當我們繼續合作時，我們可以與他們一起做其他事情。因此，我對我們的立場和整體生產力都感覺良好，但更重要的是，我們對他們的未來計劃。

We have a question from Erinn Murphy, Piper Jaffray.

我們有來自 Piper Jaffray 的 Erinn Murphy 的問題。

I guess just first, trying to understand a little bit about how you see the pathway from here. I think you talked a little bit about 2019 being slight growth, so definitely going back from the 10% to 15% sales CAGR you talked about at ICR. But within that growth, are you assuming kind of ongoing pricing that you've had over the last several years? And then how does that mix between U.S. and international? It's curious just given that you're talking more on international today.

我想首先，嘗試了解一下您如何看待從這裡開始的路徑。我認為您談到了 2019 年的小幅增長，​​因此肯定會從您在 ICR 上談到的 10% 至 15% 的銷售複合年增長率回落。但在這種增長中，您是否假設過去幾年的持續定價？那麼美國和國際之間是如何混合的呢？考慮到您今天更多地談論國際，這很奇怪。

Erinn, it's John. So on 2019, obviously, not in a position to give guidance on the year. I think there's a lot of 2018 left, but we did acknowledge that we have that 10% to 15% out there. And likely, a question on everybody's mind is how would this play out in the next year. I think there's a lot that remains yet to be seen before we would be in a position to be able to talk with any level of specificity on 2019 other than if kind of current trends continued on the path that we're talking about and acknowledging that the investments and initiatives we have in place will take time, that we would expect '19 to be a low growth year. Beyond that, hard to get more specific other than some of the things that Tarang mentioned in terms of some of the seeds that are being planted in both international geographies like the U.K. and Germany as well as some of the continued distribution opportunities that we see here in the U.S.

艾琳，是約翰。因此，對於 2019 年，顯然無法給出這一年的指導。我認為 2018 年還有很多時間，但我們確實承認我們還有 10% 到 15% 的時間。每個人都想知道的一個問題是，明年情況會如何發展。我認為，在我們能夠對 2019 年進行任何級別的具體討論之前，還有很多事情有待觀察，除非當前的趨勢是否繼續沿著我們正在討論的道路發展，並承認這一點我們的投資和舉措需要時間，我們預計19 年將是低增長的一年。除此之外，除了塔朗提到的一些事情之外，很難得到更具體的信息，這些事情是在英國和德國等國際地區播下的一些種子，以及我們在這裡看到的一些持續的分銷機會在美國。

So maybe if you could talk a little bit more about the international. It sounds like you're expanding within the U.K. and then Germany. Would love to just hear kind of how you're building the team. Are you kind of resourcing it out of there? And how are you able to scale that so it can be a bigger, longer-term opportunity for the brand?

所以也許你可以多談談國際比賽。聽起來你們正在英國和德國擴張。我很想听聽您是如何組建團隊的。你會從那裡獲取資源嗎？您如何才能擴大規模，從而為品牌帶來更大、更長期的機會？

Sure, Erin. This is Tarang. I would say our international strategy mirrors a lot of what we've done in the U.S. in terms of a discipline sequential rollout. We identified -- I think last year we talked about few priority countries that we wanted to first kind of enter. We started our journey with Canada and Mexico, obviously being next to the U.S. and having a great partner in Walmart to be able to expand into those geographies. As we looked into the U.K., our initial focus beyond our e-commerce business was with Superdrug, a division of A.S. Watson's, and they, again, were a great partner to kind of efficiently enter that market, such that not only would we see kind of, I would call it, consumer messaging that market, but so would they. 'So it ended up being a very good way of kind of launching to that market. You're seeing us do similar things in -- as we look at Germany and other big markets, is find the right retail partners that we can put our model in place with the that actually are wanting e.l.f. already given our kind of extraordinary quality and value and that have a role in that market. And so it's a pretty efficient model relative to other international expansion models I've been part of, mainly because it really relies on many of the same things we've done in the U.S. It's just pretty efficient partnering with the key retailers that matter for color cosmetics in that particular market. So we're pleased with the rollout. What you did not hear us say is we're broadening the brand into 40 or 50 countries at a time. We really want to make sure that we feed each market the right way, partner with the right retailer and kind of nurture and then expand from there, quite similar to what we did in the U.S. if you think about us starting with Target and going from there.

當然，艾琳。這是塔朗。我想說，我們的國際戰略反映了我們在美國所做的很多事情，即按順序推出紀律。我們確定了——我想去年我們談到了我們想要首先進入的幾個優先國家。我們從加拿大和墨西哥開始了我們的旅程，顯然它們毗鄰美國，並且在沃爾瑪有一個很好的合作夥伴，能夠擴展到這些地區。當我們研究英國時，除了電子商務業務之外，我們最初的重點是 Superdrug，它是 A.S. 的一個部門。屈臣氏再次成為有效進入該市場的重要合作夥伴，這樣我們不僅會看到（我稱之為）消費者向該市場傳遞信息，而且他們也會看到。“因此，這最終成為進入該市場的一種非常好的方式。你會看到我們在做類似的事情——當我們關注德國和其他大市場時，就是找到合適的零售合作夥伴，我們可以將我們的模式與實際想要 e.l.f 的人結合起來。我們已經具有非凡的品質和價值，並且在該市場中佔有一席之地。因此，相對於我參與過的其他國際擴張模式，這是一個非常有效的模式，主要是因為它確實依賴於我們在美國所做的許多相同的事情。它只是與重要零售商的合作非常有效該特定市場的彩妝。因此，我們對此次推出感到滿意。您沒有聽到我們說的是我們正在將該品牌一次擴展到 40 或 50 個國家/地區。我們真的希望確保以正確的方式滿足每個市場的需求，與合適的零售商合作並進行培育，然後從那裡進行擴張，這與我們在美國所做的非常相似，如果你想想我們從塔吉特開始並從那裡。

Okay. And then I just have a clarification on something you said in the Q&A. Did you say that Walgreens, the 2,000 doors you talked about in June, that actually shipped back in Q4? And then the Rite Aid, it's the endcap that's what's incremental from here? I just want to make sure I understood that dynamic correctly.

好的。然後我對你在問答中所說的內容進行澄清。您是否說過沃爾格林（Walgreens），您在 6 月份談到的 2,000 扇門，實際上在第四季度運回了？然後是 Rite Aid，這是從這裡開始增量的結束？我只是想確保我正確理解了這一動態。

That's right. So we shipped pipelines from Walgreens in Q4. This year will be replenishment on Walgreens and then Rite Aid was -- the displays were incremental.

這是正確的。因此，我們在第四季度從沃爾格林運送了管道。今年將在沃爾格林 (Walgreens) 進行補貨，然後是來德援助 (Rite Aid) - 展示是增量的。

Okay. And then the last question is just a housekeeping. Did you say what the number of innovations launched the quarter was? I didn't hear it. If so...

好的。最後一個問題只是家務事。您是否說過本季度推出的創新數量是多少？我沒聽到。如果是這樣...

We did not say what they were, but they're about constant to where we were last year. I think they're around 30 launches this year, including in this quarter, in Q2, including I think about 8 first-to-mass launches. So the pace of innovation continues for us. I think the main emphasis of focus for us is -- and we'll always have a number of launches. We'll always be known for our speed and putting it in our direct channels and getting the data that way. I believe the biggest change you see is just much greater concerted effort once we expand distribution. Often, what we do is we have all these launches. For example, last year, we had 128 new product launches in our direct channels. Yet when we went on shelf at kind of a Target, Walmart, there wasn't very much marketing or emphasis we put. We believe that was missed opportunity. We believe by being able to put, for example, what we're going to do in August against our Magnetic Mask. It's just a phenomenal product. It's already kind of a top seller. And being able to put more behind that, we believe, will give us better returns. So I think the overall innovation engine is the same as it's always been. It's more of how do we better leverage the best items coming out of that, particularly when we expand distribution.

我們沒有透露具體情況，但與去年的情況基本持平。我認為今年大約有 30 次發布，包括本季度和第二季度，其中我認為大約有 8 次首次大規模發布。因此，我們的創新步伐仍在繼續。我認為我們關注的重點是——而且我們總是會推出很多產品。我們將始終以我們的速度而聞名，並將其放入我們的直接渠道並以這種方式獲取數據。我相信，一旦我們擴大分銷範圍，您看到的最大變化就是更加一致的努力。通常，我們所做的就是發布所有這些內容。例如，去年，我們的直接渠道推出了 128 款新產品。然而，當我們在塔吉特、沃爾瑪之類的商店上架時，我們並沒有進行太多的營銷或強調。我們認為這是錯失的機會。例如，我們相信，通過能夠將我們將在八月份做的事情與我們的磁性面具進行比較。這只是一個非凡的產品。它已經是最暢銷的了。我們相信，如果能夠投入更多，將為我們帶來更好的回報。所以我認為整體創新引擎與以往一樣。更多的是我們如何更好地利用其中最好的產品，特別是當我們擴大分銷時。

Next question is from Bonnie Herzog, Wells Fargo Securities.

下一個問題來自富國銀行證券公司的邦妮·赫爾佐格。

It's actually Joe Lachky on for Bonnie. So I guess, I just wanted to clarify. I didn't really catch what's going to be causing the deceleration in the second half in the Nielsen to down 10%. I mean, that's pretty dramatic from, I guess, flat in Q2 and down high single in the last month. So I, again, wanted to try and get an idea what's driving that because I think comparisons do get easier in the second half.

實際上是喬·拉奇基 (Joe Lachky) 替補邦妮 (Bonnie)。所以我想，我只是想澄清一下。我並沒有真正明白是什麼導致尼爾森下半年的減速下降了 10%。我的意思是，我猜，第二季度持平，上個月單曲下降，這是相當戲劇性的。因此，我再次想嘗試了解是什麼推動了這一趨勢，因為我認為下半年的比較確實會變得更容易。

Joe, it's John. So you're correct that, obviously, an average of negative 10% sustained for the balance of the year would be inclined an added deceleration from what we have seen over the course of the last couple of months. I think from our standpoint, obviously acknowledging where we have seen that trend line go and wanting to make sure that with a revision to guidance, we do put something out that contemplates potential continuation of that deceleration felt prudent. So certainly, to the extent that we see things leveled off where they are, obviously, there could be some upside to the numbers that we're talking about here today. But otherwise, thought that it was prudent to take that approach.

喬，是約翰。所以你是對的，很明顯，今年剩餘時間平均持續 10% 的負增長可能會比我們過去幾個月看到的情況進一步減速。我認為從我們的角度來看，顯然承認我們已經看到了趨勢線的走向，並希望確保通過修訂指導意見，我們確實推出了一些考慮到減速可能持續的東西，這感覺是謹慎的。因此，當然，如果我們看到事情趨於平穩，顯然我們今天在這裡討論的數字可能會有一些上行空間。但除此之外，我認為採取這種方法是謹慎的。

Okay. And my other question, I guess, you kind of touched on this in your prepared remarks, but I feel like there has been a number of new entrants at the value end of mass cosmetics, including from retailer-owned brands. So how are you working to ensure you maintain an attractive value proposition and differentiate your products versus these newer brands?

好的。我想，我的另一個問題是，您在準備好的發言中提到了這一點，但我覺得大眾化妝品的價值端已經有許多新進入者，包括來自零售商自有品牌的進入者。那麼，您如何努力確保保持有吸引力的價值主張，並使您的產品與這些新品牌區分開來呢？

Yes, sure. Joe, this is Tarang. I would say the core of our proposition is high quality extraordinary value. We've always had value brands come and go in our category. We've obviously had good brands in terms of quality. Our unique ability to put those 2 things in a way -- in a compelling way together is really what differentiates us. So we always look at any new entrant coming through and really evaluate kind of what the quality of that product is and what the absolute both price point and overall value is, and we feel quite comfortable in terms of how we stack up with them. And again, I'll go back to one of the things I talked earlier, which is making sure that we're innovating across price points, including the lower price points in our overall value creation. The last thing, we've spent quite a bit of time given just how critical this is for us. And one of the things I said in the prepared remarks that I want to make sure doesn't get unnoticed is we do a large base size kind of consumer studies every year, and we have the highest value ratings in the category, and that has not changed. If anything, we've kind of increased those value ratings last year. So at the same time that we're taking average unit retails up, our ability to have extraordinary value is a core part of our proposition, and you'll continue to see us have great appeal and focus there.

是的，當然。喬，這是塔朗。我想說，我們主張的核心是高品質、非凡的價值。我們的品類中一直都有有價值的品牌來來去去。就質量而言，我們顯然擁有良好的品牌。我們以一種引人注目的方式將這兩件事結合在一起的獨特能力確實使我們與眾不同。因此，我們總是關注任何新進入者，並真正評估該產品的質量以及絕對價格點和整體價值，並且我們對如何與他們進行比較感到非常滿意。再次，我將回到我之前談到的一件事，即確保我們在各個價格點上進行創新，包括在我們的整體價值創造中降低價格點。最後一件事，考慮到這對我們來說有多重要，我們花了相當多的時間。我在準備好的發言中所說的一件事我想確保不會被忽視，那就是我們每年都會進行大規模的消費者研究，並且我們在該類別中擁有最高的價值評級，這已經沒有改變。如果說有什麼不同的話，那就是我們去年提高了這些價值評級。因此，在我們提高平均單位零售量的同時，我們擁有非凡價值的能力是我們主張的核心部分，您將繼續看到我們在這方面具有巨大的吸引力和關注點。

The next question is from Jon Andersen, William Blair.

下一個問題來自喬恩·安德森、威廉·布萊爾。

Most of my questions have been asked but -- and answered, but just a couple. You talked recently about broadening your sourcing model to include sourcing capabilities outside of China. Can you give us an update there with respect to that effort? And how quickly or important that is in that kind of party list right now.

我的大部分問題都被問到了，但也得到了回答，但只有幾個。您最近談到要擴大您的採購模式，以包括在中國以外的採購能力。您能給我們介紹一下這項工作的最新情況嗎？以及現在在此類政黨名單中的速度有多快或有多重要。

Sure, Jon. This is Tarang. So we talked, I think, the last quarter that we've kind of had our first U.S.-based kind of manufacturing. It's still a very small portion of our business. Most of our businesses is manufactured in China. But we do believe it's important as part of our overall global approach and, more importantly, taking our supply chain advantage. So this is a best combination of cost, quality and speed. As we take a look whether it be a tariff environment or not going forward, the combination of kind of pricing negotiations with our existing suppliers as well as taking a look at other sources of supply, including potentially having some in the U.S., is -- everything is on the table.

當然，喬恩。這是塔朗。所以我想，我們在上個季度談到了我們在美國的第一個製造業。這仍然只占我們業務的一小部分。我們的大部分業務都是在中國製造的。但我們確實相信，作為我們整體全球策略的一部分，更重要的是，利用我們的供應鏈優勢，這很重要。所以這是成本、質量和速度的最佳組合。當我們考慮未來是否存在關稅環境時，與我們現有供應商進行定價談判以及考慮其他供應來源（包括可能在美國擁有一些供應來源）的結合是——一切都擺在桌面上。

Okay. And then can you talk a little bit about where you are today? And is there reference to it in the press release? I think the ability to create shareholder value by leveraging kind of the platform and the capabilities that you've built over the years via e.l.f., are you referring to expansion of the portfolio to include multiple brands? Just trying to kind of understand where you sit relative to that, and if that's something that you continue to consider and look at.

好的。然後你能談談你今天的處境嗎？新聞稿中是否有提及？我認為通過利用 e.l.f. 多年來建立的平台和能力來創造股東價值的能力，您指的是擴大產品組合以包括多個品牌嗎？只是想了解一下你相對於此的立場，以及這是否是你繼續考慮和關注的事情。

Yes, Jon. It's John. The thesis has not changed there at all. Obviously, we've made a lot of investments in this platform and have capability in a number of different areas. And so as we look out in the marketplace, whether it's an opportunity to leverage those capabilities, to start new brands or to think about strategic acquisitions that could stand to benefit from those capabilities in a synergistic and value creative way, I think all options are still on the table in terms of tapping into some of those additional vectors, like shareholder value. And we continue to be quite active out there in the marketplace, taking a look at different opportunities to make that happen.

是的，喬恩。是約翰。論文根本沒有改變。顯然，我們在這個平台上進行了大量投資，並且在許多不同領域都有能力。因此，當我們展望市場時，無論是利用這些能力的機會、創立新品牌還是考慮戰略收購，這些收購都可以以協同和價值創造性的方式從這些能力中受益，我認為所有選擇都是在利用其中一些額外的向量（例如股東價值）方面仍然處於討論之中。我們繼續在市場上非常活躍，尋找不同的機會來實現這一目標。

Okay. Last one for me. As you contemplate spending more in advertising, other demand generation investments behind the brand, what's the right way to think about this build, if you will? Is the second half of '18 kind of just more kind of a test-and-learn period? And then you may step up to a structurally higher ad spending ratio in 2019? I'm trying to get a sense for how you see that evolving.

好的。最後一張給我。當您考慮在廣告和品牌背後的其他需求生成投資上投入更多資金時，如果您願意的話，思考此構建的正確方法是什麼？18 年下半年是否更像是一個測試和學習的時期？然後你可能會在 2019 年提高結構性的廣告支出比率？我試圖了解您如何看待這種演變。

Yes, so generally speaking, I think that's a right way to think about it, which is we're testing a number of different activities in the back half of the year, and would look to scale those up even further in 2019. I think the plan affords us to get behind something in a potentially greater way if we see things sooner, but just the nature of the timing of some of those tests are such that our expectation would be up to 2019 event. In terms of where we see kind of those scaling up to, I would go back to some of Tarang's commentary around ROI focus. Obviously, we wouldn't pursue that spend unless we thought there was a corresponding benefit that accompanied it. And we have a long way to go before we ever came close to our legacy competitors and don't have any intention of being there. So I think we're not in a position to give specific guidance on how many dollars or what percentage. If I was forced, I would say single digits is absolutely appropriate, and I could feel quite comfortable with that. But we're excited about the prospect to put more dollars behind this brand.

是的，所以總的來說，我認為這是正確的思考方式，我們正在今年下半年測試許多不同的活動，並希望在 2019 年進一步擴大這些活動的規模。我認為，如果我們能更早地看到事情，該計劃使我們能夠以可能更大的方式支持某些事情，但由於其中一些測試的時間安排，我們的預期將持續到 2019 年的事件。就我們看到的擴大規模而言，我會回顧一下 Tarang 圍繞投資回報率焦點的一些評論。顯然，我們不會追求這筆支出，除非我們認為它會帶來相應的好處。在接近我們的傳統競爭對手之前，我們還有很長的路要走，並且沒有任何意圖進入那裡。因此，我認為我們無法就多少美元或多少百分比提供具體指導。如果我被迫的話，我會說個位數絕對合適，而且我對此感到很舒服。但我們對為這個品牌投入更多資金的前景感到興奮。

That's helpful. Let me squeeze one more in. I know you're limited in what you can say about 2019, but you did comment that you expect sitting here today it to be a low growth year. Is that low-growth-year comment apply to sales and earnings?

這很有幫助。讓我再擠一顆進去。我知道您對 2019 年的看法有限，但您確實評論說，您預計今天坐在這裡，這將是低增長的一年。低增長年份的評論是否適用於銷售和收益？

Again, I think you said it well, Jon, that we're not in a position to give kind of clarity on 2019, really more intended to be a reflection that if things that we currently see in terms of those trends played out forward into '19, that a low growth year should be expected relative to some of the earlier rates that were on the table. The only thing that I would mention is if a low growth year were to manifest itself, suffice to say, we would be looking for the opportunities for operating leverage in the business and places to continue reinvesting in the brand.

再說一遍，喬恩，我認為你說得很好，我們無法對 2019 年做出明確的說明，實際上更多的是反映，如果我們目前在這些趨勢方面看到的事情向前發展， '19 ，相對於之前提出的一些利率，預計今年的增長將會較低。我唯一要提到的是，如果低增長年份顯現出來，足以說，我們將尋找業務運營槓桿的機會以及繼續對品牌進行再投資的機會。

The next question is from Andrea Teixeira, JPMorgan.

下一個問題來自摩根大通的 Andrea Teixeira。

It's Christina Brathwaite on for Andrea. First, I wanted to just circle back on the comment that Tarang made about the sell-through of older products kind of falling off faster than it's been historically. Have you done any research into what's kind of driving that deceleration there from kind of the historical trend?

克里斯蒂娜·布拉思韋特 (Christina Brathwaite) 替補安德里亞 (Andrea)。首先，我想回顧一下 Tarang 的評論，即舊產品的銷量下降速度比歷史上更快。您是否對歷史趨勢導致減速的原因進行過研究？

So we've done a bit of analysis. The specific piece I was talking about is there is a mix every year on our shelves of bringing new products on and what we call our carryforward, and we do see a little bit of a falloff on carryforwards over time. It is a natural kind of falloff as consumers are constantly looking for a new innovation, and so there's always this healthy balance there. And I would say in this particular -- and it varies sometimes retailer by retailer. You can have at a particular retailer a competitive initiative on brushes that could impact your brush business in one place versus another or face products. And so I would say for us, it's really about the mix of how much new versus old do we have. And we know -- I think one of the great things that we have is we have so many new products that we can pick from. And if I just go back to the -- if I just look at this year as an example, I talked earlier about Magnetic Mask being a phenomenal item for us. That was not in broad distribution until just now that we are really broadening that out. We had a -- for example, in our pipeline last year, we had a $4 total face sponge, which is a terrific product and a great kind of value proposition. Again, that's only going in distribution now versus kind of where it was in the spring. Mist & Set is a great category for us. We didn't have kind of the larger size kind of available there. Our oil control primer mist, our lip plumping glosses. There are a number of items that we were not able to get on the shelf, and we think that hurt us, frankly, relative to -- versus kind of our carryforwards and what we're seeing there.

所以我們做了一些分析。我所說的具體內容是，每年我們的貨架上都會混合推出新產品和我們所說的結轉，隨著時間的推移，我們確實看到結轉略有下降。這是一種自然的衰退，因為消費者不斷尋找新的創新，因此總是存在這種健康的平衡。我想說的是，有時每個零售商的情況都會有所不同。您可以在特定零售商處針對刷子採取競爭舉措，這可能會影響您在一個地方的刷子業務相對於另一個地方或面部產品的業務。所以我想說，對我們來說，這實際上是關於我們有多少新與舊的混合。我們知道——我認為我們擁有的最偉大的事情之一就是我們有這麼多新產品可供選擇。如果我回顧一下——如果我以今年為例，我之前談到磁性面罩對我們來說是一個非凡的產品。直到現在我們才真正擴大了它的範圍，它才被廣泛發行。例如，去年我們的產品線中，我們推出了一款總價值 4 美元的洗臉海綿，這是一款很棒的產品，也是一種很好的價值主張。再說一次，這只是現在的分發，而不是春季的分發。Mist & Set 對我們來說是一個很棒的類別。我們那裡沒有更大尺寸的可用。我們的控油底漆噴霧，我們的豐唇唇彩。有很多商品我們無法上架，坦率地說，我們認為這對我們造成了傷害，相對於我們的結轉和我們在那裡看到的情況。

Okay. And then to go -- move back over to the tariff commentary. How are you thinking about -- and then one of the comments that you made was that you could pass on pricing to kind of preserve your margin because of the tariff. But how are you thinking about your ability to pass on higher pricing just given the volume pressure you've seen this year, which I think is partially, or at least during the last call, was distributed to raising kind of the ticket. How much flexibility do you think you have there just versus your original brand composition of being the lowest cost provider and in this environment with private label continuing to -- taking share and be more aggressive?

好的。然後回到關稅評論。你是怎麼想的——然後你發表的評論之一是，你可以通過定價來保留你的利潤，因為關稅。但是，考慮到今年你所看到的銷量壓力，你如何看待你傳遞更高定價的能力，我認為這種壓力部分地，或者至少在最後一次電話會議中，被分配給了提高門票的類型。您認為與作為成本最低的供應商的原始品牌構成相比，您有多大的靈活性，並且在這種自有品牌繼續佔領市場份額並更具侵略性的環境中？

Christina, it's John. So I don't want to get too far into it just given the uncertainty of where some of these conversations stand and then competitive sensitivity as to what we may or may not do, but I think it's important to note that pricing is one of several levers that we see available to us. As we mentioned, obviously, having our suppliers, who have long partnerships with us over the years, share in some of that burden. And also some of the things that we would expect in terms of the broader exchange rate that would certainly serve to be a mitigant here would obviously play into the calculus as well. That said, selectively on a number of different items, that we believe that there could be opportunity to take price. And if you think about the mass landscape in particular, many of the folks that we're actually sitting alongside also have sourcing in country, and so that would help inform a pricing strategy. So I would just leave it at that, but it would be a combination of things of which pricing would be one.

克里斯蒂娜，這是約翰。因此，考慮到其中一些對話的不確定性，以及我們可能做什麼或不做什麼的競爭敏感性，我不想深入探討這一點，但我認為重要的是要注意定價是其中之一我們認為可用的槓桿。正如我們提到的，顯然，多年來與我們有著長期合作夥伴關係的供應商分擔了一些負擔。此外，我們預計在更廣泛的匯率方面肯定會起到緩解作用的一些事情顯然也會影響到計算。也就是說，有選擇地針對許多不同的項目，我們認為可能有機會定價。如果你特別考慮大眾情況，我們實際上坐在一起的許多人也在國內進行採購，因此這將有助於製定定價策略。所以我就這樣吧，但這將是多種因素的結合，其中定價就是其中之一。

All right. That's helpful. And then I guess last one for me. I'm just trying to reconcile the difference in commentary between the need to invest more behind the brand and then the contraction that you saw on SG&A dollar growth during this quarter. Was there something specific like discrete to 2Q that was pulled out in terms of SG&A? Just trying to think about how we should be growing that line item and the rest of the year.

好的。這很有幫助。然後我想最後一個對我來說。我只是想調和對品牌背後的更多投資的需要與本季度銷售、管理及行政費用 (SG&A) 美元增長收縮之間的評論差異。是否有一些特定的東西，比如第二季度的離散產品，在SG&A方面被取消了？只是想想想我們應該如何增加該訂單項以及今年剩餘的時間。

No, there was nothing specific that we would call out. I think it was more timing than anything else. Certainly, as you take a look at SG&A levels in the back half of the year, you will see them tick up. And as I mentioned earlier, some of that is really about getting us flexibility to get behind brand spend in a greater way if, for whatever reason, some of the earlier tests we really wanted to get behind.

不，我們沒有什麼具體的要求。我認為這比其他任何事情都更重要。當然，當您查看下半年的銷售及行政管理水平時，您會發現它們有所上升。正如我之前提到的，其中一些實際上是為了讓我們能夠靈活地以更大的方式支持品牌支出，無論出於何種原因，我們確實想要支持一些早期的測試。

Okay. Oh, sorry, did you say guide to the tax rate for the rest of the year? It should be closer to 20% of your products this quarter?

好的。哦，抱歉，您說的是今年剩餘時間的稅率指南嗎？這個季度你們的產品應該接近20%吧？

It would still be consistent with what we guided to last quarter, which is about 28%.

這仍然與我們上季度的指導一致，即 28% 左右。

Next question is from Dara Mohsenian, Morgan Stanley.

下一個問題來自摩根士丹利的 Dara Mohsenian。

So Tarang, I just want to follow up on the question on your shelf space allocation or your larger mass customers going forward. I guess, my concern would be, your revenue trends are now declining fairly significantly at those customers, and that's a pretty pronounced shift versus the strong momentum you saw historically. So I understand you're still productive, but seems like that's a risk factor. You're also expanding into other retailers in 2019 beyond those key mass retailers, and it sounds like you may look for some pricing. So I would think all those things would create some pretty difficult discussions at the larger customers and potential shelf-space risk. You didn't sound as concerned earlier. So can you just give me a little more detail around sort of what drives your confidence on that front? And also in the 2019 revenue guidance you gave, what are you assuming in shelf space at those mass retailers in 2019?

Tarang，我只想跟進有關您的貨架空間分配或未來更大的大眾客戶的問題。我想，我擔心的是，您的收入趨勢現在在這些客戶中顯著下降，與您歷史上看到的強勁勢頭相比，這是一個非常明顯的轉變。所以我知道你仍然富有成效，但這似乎是一個風險因素。2019 年，除了這些主要的大眾零售商之外，您還將擴展到其他零售商，聽起來您可能會尋求一些定價。因此，我認為所有這些事情都會在大客戶中引發一些相當困難的討論以及潛在的貨架空間風險。你之前聽起來並不那麼擔心。那麼，您能否給我提供一些更多細節，說明是什麼推動了您在這方面的信心？在您給出的 2019 年收入指引中，您對 2019 年這些大型零售商的貨架空間有何假設？

So I'll take the first one and John the second. So in terms of our approach with our key customers, what we like is finding partners with both Target and Walmart. So we're with them all the time, where we're talking the business, we're talking kind of the trends, what we have coming in our pipeline and kind of where we go forward. So I go back to -- our overall productivity is extremely strong. Even more important than that, our plans going forward are even stronger. So if I take a look at kind of what are our learnings this year in terms of what new items would we have on the shelves, which ones do we want on, what do we have in our pipeline, those conversations are going really well. And it is a continued kind of partnership in terms of how we help kind of grow their category. And overall track record, I'd tell you, is our 10 years at Target is like the first year where we've run into this. And so we'll have very frank and great conversations with them in terms of what we're going to do. Same with Walmart for perspective. The majority upper chain at Walmart is still -- the vast majority is still only in the 4%, compare that to close to 30-foot run on some of the legacy players. We are so far above kind of on both productivity as well as kind of underspaced in terms of what our fair share allocation would be that, that conversation hasn't even come into kind of the picture as much as kind of what are we going to do to continue to partner to help grow their category. So you never say never. I think we've had some competitors kind of get in trouble that way, but I feel very confident in terms of our plans going forward both with Target and Walmart and our position. And then on the second part of your question, which is, hey, as you expand distribution, I think we've been very careful of how we've expanded distribution. If you think of our approach kind of from Target to Walmart, we really made sure we had a strong plan at Target before we went into Walmart. And as we continue to expand in Walmart, same thing with Walmart as we've gone into Ulta. I mean, we're talking about 15-year-old brand that's only now really getting into kind of drug in a bigger way, and each have a role that we can map towards. And -- but first and foremost is making sure, and our strategy all along has been take care of kind of where we already have business, and we don't take that lightly. And I tell you there's a lot that goes after, making sure that we continue to partner well with them.

所以我選擇第一個，約翰選擇第二個。因此，就我們與主要客戶的合作方式而言，我們喜歡尋找塔吉特和沃爾瑪的合作夥伴。所以我們一直和他們在一起，我們談論業務，我們談論趨勢，我們正在開發的產品以及我們前進的方向。所以我回到——我們的整體生產力非常強勁。更重要的是，我們未來的計劃更加強大。因此，如果我看看今年我們學到了什麼，比如我們將在貨架上推出哪些新產品、我們想要哪些產品、我們的管道中有哪些產品，那麼這些對話進展得非常順利。就我們如何幫助他們發展他們的類別而言，這是一種持續的合作夥伴關係。我想告訴你的是，從總體記錄來看，我們在塔吉特的 10 年就像我們遇到這種情況的第一年。因此，我們將與他們就我們將要做的事情進行非常坦誠和愉快的對話。與沃爾瑪的觀點相同。沃爾瑪的大多數上游連鎖店仍然是——絕大多數仍然只佔 4%，相比之下，一些傳統企業的連鎖店接近 30 英尺。到目前為止，我們在生產力方面遠遠超出了預期，而且在我們的公平份額分配方面也有點不足，這種對話甚至還沒有像我們要做什麼那樣進入到我們的視野中。繼續合作以幫助發展他們的類別。所以你永遠不要說永遠。我認為我們的一些競爭對手已經遇到了這種麻煩，但我對我們與塔吉特和沃爾瑪的計劃以及我們的地位非常有信心。然後，關於你問題的第二部分，嘿，當你擴大分銷時，我認為我們對擴大分銷的方式非常謹慎。如果你認為我們的方法有點像從塔吉特到沃爾瑪，那麼在進入沃爾瑪之前，我們確實確保在塔吉特有一個強有力的計劃。隨著我們繼續在沃爾瑪擴張，我們在沃爾瑪的業務也與我們進入 Ulta 的業務一樣。我的意思是，我們談論的是一個已有 15 年曆史的品牌，直到現在才真正以更大的方式涉足某種藥物領域，每個品牌都有我們可以定位的角色。而且——但首先也是最重要的是確保我們的戰略一直是照顧我們已經有業務的領域，我們不會掉以輕心。我告訴你，還有很多事情要做，以確保我們繼續與他們良好合作。

And Dara, yes, on the 2019 question, I'd just echo some of my earlier perspective that it's far too early to talk specifics.

達拉，是的，關於 2019 年的問題，我只是重複我之前的一些觀點，即現在談論具體細節還為時過早。

Okay. And then on the China tariff side, are you assuming in your guidance there is a 10% tariff on your imports into the U.S.? And do you have any backup plans in place in terms of sourcing if the regulatory delays and other things like that out of China maybe is sort of an indirect result of some of these tariffs?

好的。那麼在中國關稅方面，您是否假設在您的指導中對美國進口產品徵收 10% 的關稅？如果監管延遲和中國以外的其他類似情況可能是其中一些關稅的間接結果，您在採購方面是否有任何後備計劃？

So there's no assumption of a tariff in the back half of 2018, I think even, again, difficult to comment on some of the plans that are on the table, but in question would be the timing of when some of those things would take hold. The other thing I'd say is no benefit from some of the mitigating levers that we talked through earlier. And the second point in terms of our supply and if there's any issues there, be it on kind of looking from a global supply basis, a lot of it just comes to our inventory position and how that flows through. So we're comfortable right now, but really, we have to see kind of where the tariffs finally land.

因此，不存在 2018 年下半年徵收關稅的假設，我認為甚至很難對擺在桌面上的一些計劃發表評論，但問題是其中一些計劃何時實施。我要說的另一件事是我們之前討論過的一些緩解措施沒有任何好處。第二點是我們的供應，如果有任何問題，無論是從全球供應的角度來看，很多問題都與我們的庫存狀況及其流動方式有關。所以我們現在很舒服，但實際上，我們必須看看關稅最終會落在哪裡。

The next question is from Mark Astrachan, Stifel.

下一個問題來自 Stifel 的 Mark Astrachan。

This is Claire Chamberlin on for Mark Astrachan. I just wanted to ask a question about productivity in Ulta. So you've mentioned that your very high productivity in some of the larger retail. But can you talk about how you compare and also versus the other mass brands in there?

我是馬克·阿斯特拉坎 (Mark Astrachan) 的克萊爾·張伯倫 (Claire Chamberlin)。我只是想問一個關於 Ulta 生產力的問題。所以您提到您在一些大型零售業中的生產力非常高。但您能談談您如何與其他大眾品牌進行比較嗎？

Sure, Claire. This is Tarang. So we -- Ulta doesn't want us to give specific numbers, so I'm not going to give you a particular and relative. What I can tell you is we're both very pleased with kind of the productivity of e.l.f. in -- as they did their full chain rollout. And I think a great testament to that is on testing skincare in a subset of their stores. So we're quite excited by what we're seeing at Ulta, and again, it goes back to kind of, we believe, as a good consumer overlap as well.

當然，克萊爾。這是塔朗。所以我們——Ulta 不希望我們給出具體的數字，所以我不會給你一個特定的和相對的數字。我可以告訴你的是，我們都對 e.l.f. 的生產力感到非常滿意。正如他們進行的全鏈條推廣一樣。我認為一個很好的證明就是在他們的一部分商店中測試護膚品。因此，我們對 Ulta 所看到的情況感到非常興奮，而且我們相信，這也可以追溯到一種良好的消費者重疊。

The final question is from Steph Wissink, Jefferies.

最後一個問題來自 Jefferies 的 Steph Wissink。

We're trying to be compliant with one question, so we'll throw another one out there. I just want to follow up on your comments on tracked data. So the down 10%, if we look at the second half guidance that you gave, specifically the rollout into Rite Aid, higher holiday at Target. Just curious, wouldn't those imply that tracked data should actually get better versus worse? I think those are both tracked data retailers. So maybe talk a little bit about tracked versus untracked and how we should think about the distribution initiatives not affecting tracked data but being factored into your guidance.

我們試圖回答一個問題，所以我們會提出另一個問題。我只是想跟進您對跟踪數據的評論。因此，如果我們看看您給出的下半年指導，特別是 Rite Aid 的推出，塔吉特 (Target) 的更高假期，則下降 10%。只是好奇，這難道不是意味著跟踪的數據實際上應該變得更好而不是更糟嗎？我認為這些都是跟踪數據零售商。因此，也許可以談談跟踪與非跟踪，以及我們應該如何考慮不影響跟踪數據但將其納入您的指導的分發計劃。

Steph, it's John. So always a little bit difficult to draw heavy correlation from track data and sell through all the way up through company sales. And we've spoken to that in the past and a number of things that actually influence company sales that aren't reflected in the tracked piece, but there are a few things I'd say. First, obviously, that 10% number is an average for the balance of the year. I think a couple of things that I would draw to your attention to kind of keep in mind as you think about the delta between that and the company sales would really come back to some of my commentary on the third quarter. Obviously, there were quite a few things that were transpiring in the third quarter of 2017 that create pretty significant dislocation to what that headline growth rate will look like in Q3 of '18. And so I think you'd have to sort of normalize that back out to get a better sense for how you could sort of compare the company sales to track sales. The other piece I mentioned on Q4, which was the shipment of Ulta pipeline. Obviously, that doesn't get captured in tracked channels generally and in year-over-year some of the non-tracked benefit is more muted than the fourth quarter as a result.

斯蒂芬，是約翰。因此，從跟踪數據中得出高度相關性並通過公司銷售一路向上進行銷售總是有點困難。我們過去已經談過這一點，以及一些實際上影響公司銷售的事情，這些事情沒有反映在跟踪的文章中，但我想說一些事情。首先，顯然，10% 的數字是今年剩餘時間的平均值。我認為，當您考慮這一數字與公司銷售額之間的增量時，我會提請您記住一些事情，這確實會回到我對第三季度的一些評論。顯然，2017 年第三季度發生的很多事情與 18 年第三季度的總體增長率產生了相當大的混亂。因此，我認為您必須將其標準化，以便更好地了解如何比較公司銷售額以跟踪銷售情況。我在第四季度提到的另一件事是Ulta管道的出貨量。顯然，這通常不會在跟踪渠道中體現出來，因此，與去年同期相比，一些非跟踪收益比第四季度更加微弱。

One last question from Rupesh Parikh, Oppenheimer & Co.

最後一個問題來自 Oppenheimer & Co. 的 Rupesh Parikh。

So as you look for that -- your deceleration at some of your larger retailers in the metro channel, have you seen any competitive changes that you think have had a weight on your performance? I know at least in our checks in Northern New Jersey, we've seen Walmart at least starting to promote the NYX product in some of their stores.

因此，當您尋找地鐵渠道中一些大型零售商的減速時，您是否看到任何您認為對您的績效產生影響的競爭變化？我知道至少在新澤西州北部的檢查中，我們看到沃爾瑪至少開始在他們的一些商店推銷 NYX 產品。

Sure. I mean, I think every year, you're going to have -- in every retailer, you're going to have different impacts kind of at each of their stores. I think on NYX, I think in particular we've seen NYX come into Target a few years ago as we came into both Ulta and CVS. We don't have as much interaction with NYX. Now it's still early days, and we'll have to take a look. So I wouldn't point to NYX as an interaction. In fact, a lot of times, we will recommend to retailers that they anchor their departments with both e.l.f. and NYX as we both appeal to kind of core enthusiast consumers but a different consumer set. And so we think they're a good competitor and we have yet to see kind of real impact there. I would just say from a macro standpoint, probably less so on kind of some of the legacy players in the space and more on some of these other kind of brands that are kind of mega-influencer-driven that are -- gains our consumers' attention. But again, we map it out both by customer as well as by core competitor.

當然。我的意思是，我認為每年，每個零售商都會對他們的每個商店產生不同的影響。我認為在 NYX 上，我特別認為幾年前我們已經看到 NYX 進入了 Target，就像我們進入了 Ulta 和 CVS 一樣。我們與 NYX 的互動不多。現在還為時過早，我們得看看。所以我不會將 NYX 視為一種互動。事實上，很多時候，我們會向零售商推薦他們用 e.l.f. 來固定他們的部門。和 NYX，因為我們都吸引了核心愛好者消費者，但消費者群體不同。因此，我們認為他們是一個很好的競爭對手，但我們還沒有看到真正的影響。我只想說，從宏觀角度來看，對於該領域的一些傳統參與者來說，可能不會那麼重要，而對於其他一些由超級影響者驅動的品牌來說，更多的是——贏得了我們消費者的青睞。注意力。但我們還是按客戶和核心競爭對手來製定計劃。

Okay. And then one quick last one. John, I was hoping you can provide some guidance in terms of how you're thinking about the outlook for gross margins in the back half of the year.

好的。然後是最後一張。約翰，我希望您能就如何看待下半年的毛利率前景提供一些指導。

Sure. So I would say consistent with our expectations coming into this year, we would expect gross margins to be in line with where they were in 2017. I think the way that, that plays out, you'll probably see them come in a little below where they were last year for the third quarter, and then the balance will be made up in Q4.

當然。因此，我想說，與我們今年的預期一致，我們預計毛利率將與 2017 年持平。我認為，按照這種方式，您可能會看到第三季度的業績略低於去年的水平，然後餘額將在第四季度得到彌補。

This concludes the question-and-answer session. I'd like to turn the floor back over to management for closing comments.

問答環節到此結束。我想將發言權交還給管理層以徵求結束意見。

Okay. Well, thanks again for joining us. While we're currently facing challenges, e.l.f. is a young brand with plenty of whitespace ahead of it. We believe investing more in the brand, integrating efforts behind our key products and improving our retail assortment through Project Unicorn are important actions for both the short and long term. Additionally, our business model and brand remains strong. e.l.f. is a brand young, diverse beauty enthusiasts love. And we have a high quality beauty products at an extraordinary value. Finally, we have a great platform and team.

好的。好的，再次感謝您加入我們。雖然我們目前面臨挑戰，但 e.l.f.是一個年輕的品牌，前面有很多空白。我們相信，加大對品牌的投資、整合我們關鍵產品背後的努力以及通過“獨角獸計劃”改善我們的零售品種，都是短期和長期的重要行動。此外，我們的商業模式和品牌依然強勁。e.l.f.是年輕、多元化美容愛好者喜愛的品牌。我們擁有物超所值的高品質美容產品。最後，我們有一個很好的平台和團隊。

We look forward to seeing you at the Wells Fargo Conference in September. Thank you very much.

我們期待在九月份的富國銀行會議上見到您。非常感謝。