MMM: Target 1Q24 App Engagement Trends and Earnings Results; Beauty Industry Advertising Trends

Key Takeaways:

• Target’s 1Q same-store sales fell 3.7%, including a nearly 5% YoY drop in the store channel, despite higher promotional markdown rates YoY. In contrast, Target’s reported digital channel sales growth rose 1.4%, in line with Sensor Tower’s 1.8% YoY mobile app MAU growth

• However, Target saw a significant drop in mobile app engagement levels in FY1Q24, with session count and average time spent dropping 4% and 9% YoY, respectively, per Sensor Tower data; Target’s reliance on higher-margin discretionary categories is weighing on its top line growth

  • Comparatively, Walmart’s session count increased just under 1% YoY, while time spent was flat YoY, again indicating that in times of economic pressure, Walmart’s expansive grocery assortment and value pricing are a draw to customers across income levels

• Given the ongoing macro pressures, price conscious customers have flocked to mass and masstige beauty products (e.g. affordable and affordable luxury products), boosting sales of brands such as e.l.f. Beauty; Elf’s FY 4Q24 (FYE Mar’24)/CY1Q24 beat expectations, with sales rising 71% YoY and hitting $1bn

  • A 28% QoQ increase in FY 4Q24 (CY 1Q24) US ad spend helped to drive Elf’s growth per ST data

  • Compared to FY 4Q23 (CY 1Q23), Elf allocated a greater percentage of its US ad spend to Meta properties (23%), Pinterest (18%), TikTok (27%) and YouTube (12%), while cutting spend to OTT and Snapchat in FY4Q24 (CY 1Q24)

  • This pivot is likely an effort to reach those social media platforms’ more engaged users, who have a greater share of discretionary income and are more likely to spend on beauty, given that those platforms’ personas are most likely to be Fashionistas and Digital Socialites, per ST’s Audience Insights data

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