By Claudia Assis and Bill Peters
The next makeup 'boom cycle' may be ahead, fueled by Gen Z's nostalgia for all things 2016
Kourtney Kardashian, Kim Kardashian and Kris Jenner attended Paris Fashion Week in October 2016. Ten years later, some of their looks from that year are trending again.
A recent social-media trend has people sharing photos from 2016 and yearning for a time when bloggers had not yet turned into influencers and social media still was something of a novelty for many.
For investors, that 2016 nostalgia also offers a possibility: It could fuel the next supercycle for beauty products, specifically makeup, benefiting companies such as cosmetics maker e.l.f. Beauty (ELF) and specialty retailer Ulta Beauty (ULTA). After all, 2016 was a heyday for a heavier, bolder makeup look, only to be followed by &#34;no-makeup makeup&#34; trends.
The cosmetics industry is expected to grow by more than 4% this year and is poised to be a retail growth leader, according to market-research firm eMarketer. While it's still early, the firm expects a return to colorful cosmetics this year, following several years of cleaner styles, neutral palettes and a &#34;clean girl&#34; aesthetic ushered in by influencers like Rhode founder Hailey Bieber.
Industry analysts aren't making the call that people of all ages will fully revert to 2016 makeup styles, but there's definitely a shift away from the no-makeup trend, Jefferies analyst Sydney Wagner said.
&#34;People may not wear purple eyeshadow, but they might return to eyeliner&#34; or push into something different, the analyst said. &#34;Anecdotally, people are kind of bored by the clean, no-frills makeup look&#34; and are into more creative, bolder looks as a means of self-expression, she said.
Sky Canaves, a retail and e-commerce analyst at eMarketer, said the nostalgia for 2016 could reignite interest in some of the brands that were popular then.
&#34;I don't know if we'll go full 2016, because that aesthetic now does look a little bit dated,&#34; she said. &#34;But there's certainly room for more interest in experimenting with color cosmetics.&#34;
'Going analog'
If 2016 may feel like just yesterday to older people, for Gen Z consumers driving newer trends, the year speaks to simpler times on a much more compressed nostalgia scale.
Google (GOOG) (GOOGL) searches for &#34;analog bag&#34; - a bag or basket containing hands-on activities and entertainment such as puzzles and knitting, with no screens - hit a record last month, the company said. Searches for &#34;going analog&#34; reached an all-time high in December as people try to cut back on screen time or eschew it altogether.
Fragrance is also having a moment, particularly among millennials and Gen Z shoppers. Part of what has boosted the industry is younger generations' penchant for &#34;fragrance wardrobes,&#34; with a scent to suit every mood, rather than the one or two signature perfumes favored by older generations.
The last makeup supercycle started around 2012 and continued through about 2018. Selfies were becoming more prevalent as social media grew, and standards of beauty hewed close to celebrity Kim Kardashian's looks, especially in regards to eye makeup and products used for face contouring. Smaller, more niche cosmetics makers created bold looks, and influencers started offering makeup tutorials on social media.
&#34;It really democratized beauty during that period, because of creators teaching people how to achieve professional-grade makeup looks in their own homes,&#34; Canaves said. &#34;We started to see a lot more intensive makeup looks, with contouring and heavy eye shadow application.&#34;
The makeup maximalism of the last decade wound down before the pandemic hit, with a stronger skin-care cycle picking up before the pandemic and booming in the years since.
The current reign of natural, effortless looks has also been propelled by a years-long move toward wellness, and a shift toward products that make people feel a certain way rather than simply look a certain way, Canaves said.
Wendy Nicholson, an analyst at Baird, says that while the hallmarks of 2016 may be appealing to some, preferences for beauty products will continue to be different based on age and demographics.
More mature consumers are likely to stick with natural, subtler looks, she said. At brands that target older demographics, such as Jones Road, Saie and Counter, color palettes are &#34;generally subdued.&#34;
&#34;For younger consumers, we believe that color is front and center. The blowout success of the launch of Selena Gomez's Rare Beauty brand at Ulta is a testament to this,&#34; she said. Among teens, other examples include the ongoing popularity of lip stains and brightly colored pimple patches.
A nimble supply chain
E.l.f. Beauty, which late Wednesday reported a better-than-expected quarter and raised its outlook for the year, could be the &#34;clear winner&#34; from the 2016 trend, Wagner said.
E.l.f. bought Rhode for $1 billion last year, so it has something to offer in the &#34;clean&#34; aesthetics arena while it can go bolder in its regular line. E.l.f. expects Rhode to deliver around $260 million to $265 million in sales for the year, compared with earlier expectations for $200 million.
The maker of cosmetics and skin-care products has &#34;an incredibly nimble supply chain&#34; and is capable in some instances of going from idea to retailers' shelves in as little as nine weeks, Wagner said.
That's more important than ever, because trends are cycling through faster than in the past. Some legacy players in the beauty industry, such as Coty (COTY) and Estée Lauder (EL), work with much longer turnaround times, measured in months, not weeks, although they've also been working to get their innovations to consumers more quickly.
Estée Lauder reported quarterly earnings on Thursday, beating earnings expectations and raising its profit outlook, although not by enough to meet high investor expectations.
Wall Street also sees Ulta as a potential winner and as well positioned to capitalize on fast-changing makeup trends. People may be reluctant to buy several different brands of skin-care products, but they are more likely to add a variety of shades or formulations to their makeup bags.
Among retail giants, Target (TGT) recently announced a push toward beauty and makeup products hitting its stores in the spring. E.l.f., meanwhile, has started selling more beauty products at stores like Dollar General (DG).
-Claudia Assis -Bill Peters
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(END) Dow Jones Newswires
02-07-26 0800ET

ULTA

Gen Z's nostalgia for 2016 is driving a potential boom in the beauty industry, benefiting brands like e.l.f. Beauty and Ulta Beauty. Analysts suggest a shift from the 'no-makeup' trend towards bolder makeup styles reminiscent of 2016. The cosmetics market is expected to grow over 4% this year, with a renewed interest in colorful cosmetics. While preferences vary by age, younger consumers are leaning towards vibrant products, as seen with the success of Selena Gomez's Rare Beauty. E.l.f. Beauty recently reported strong earnings and raised its outlook, positioning itself well for this trend.

Gen Z is obsessed with 2016, and beauty stocks like e.l.f. and Ulta are riding the nostalgia wave