CTZN Cosmetics’ Sales Are Surging On Retail Growth As Its Parent Company Fundraises And Looks To Buy Brands

At the onset of the pandemic in 2020, CTZN Cosmetics was in a difficult spot.

The inclusive prestige makeup brand had been gaining recognition in the nearly a year it had been in business from influencer and professional makeup artist recommendations, but it was rooted in lipsticks that consumers stuck in lockdown weren’t wearing. And it had ambitions to stretch from direct-to-consumer distribution to stores that were undercut by coronavirus-related closures and retailers’ purchasing pullbacks.

Rather than desperately discounting its products or resorting to hard selling, London-based CTZN Cosmetics committed to listening to and communicating with consumers about their lives during a stressful period as it rode out the worst of the pandemic in the United States, where 80% of its revenues currently are driven. The risky strategy turned out to be constructive.

“My girls decided, you know what, now is the time we need to come together as a community. We started to engage with our customer base. I won’t even call them customers because they weren’t necessarily buying at the time, but we started building this community,” recounts Tariq Khan, executive chair and CEO of Citizen Cosmetics Ltd., the parent company of CTZN Cosmetics, which he runs with his daughters Aleena, Aleezeh and Naseeha. “That’s something that stayed with us. The loyalty we have is because we were a non-commercial brand.”

Today, CTZN Cosmetics is in a completely different spot. The makeup category and retail industry have rebounded. According to market research firm The NPD Group, prestige makeup sales surpassed pre-pandemic levels by advancing 15% to $2.1 billion in the third quarter of this year. CTZN Cosmetics is looking to outpace category growth by far. It’s projecting sales could jump 300% in 2023 and 500% in 2024. The brand has a reorder rate exceeding 50%.

CTZN Cosmetics’ growth is being propelled by its rising retail footprint. It entered eight Nordstrom locations and the department store retailer’s website in the summer of 2021. “I had my entire team go to LinkedIn and find out everybody who works in the executive department in beauty at Nordstrom and shade-matched every one of them to our nude lipsticks. That worked,” recalls Khan. “The director of beauty at the time loved the product so much she was topping off her lipstick in meetings.” Nordstrom has rolled CTZN Cosmetics out to another 18 locations and is extending the brand to Canada.

After it entered Nordstrom, the brand inked a deal with Thirteen Lune. That relationship landed it in the e-tailer’s selection at J.C. Penney. By spring of 2023, it’s expected to be across the chain’s 600-plus store network. CTZN Cosmetics has also gone into over 200 Nordstrom Rack stores at the impulse section at cash registers with a three-pack of lip liners. It anticipates an in-line presence at Nordstrom Rack in the future and is slated to be in 180 Douglas stores in Europe in a few months.

CTZN Cosmetics forecasts it could hit 1,000 doors in 2023 and as many as 5,000 in 2024. Beauty specialty retailers are a target for the brand. At the moment, retail accounts for 80% to 85% of its sales. Discussing profitability, Khan says, “We are in the norm. When I look at annual reports for public companies like Estée Lauder and L’Oréal, the general trend is 66% gross margin and 30% net margin, and we are in that space. We manage things efficiently.”

“My goal is to create a mini Estée Lauder.”

Supply chain efficiency has been a priority for CTZN Cosmetics of late. Its products are manufactured in Italy, and it can take six months from order placement to final merchandise. To help speed up the process, Citizen Cosmetics has leveraged the technology and data proficiencies of the platform Succhi to improve supply chain management. The company is in the middle of series A fundraise with the aim of securing around $8 million and a portion of that funding will be allotted to stockpiling components to aid with supply chain flexibility.

Along with supply chain capabilities, the funding will be dedicated to CTZN Cosmetics’ product pipeline and educators to visit its stockists. Sitting at four products with a total of 45 stockkeeping units priced from $18 to $29, the brand is slated to amplify its range to seven products and 55 stockkeeping units within a year. Lip liners are its bestseller. Eyes will be a big focus going forward. “The path we are following is going from daytime to nighttime,” says Khan. “For example, the next product is a dual-ended product for the eyes that takes you through the course of the day.”

CTZN Cosmetics has detected that store visits with Sir John, the celebrity makeup artist who recently signed on as the brand’s chief creative officer and has an equity stake in it, visits stores, escalate conversion considerably—and Khan believes a similar outcome will occur with the brand ramping up store visits from educators. Referring to Sir John, Khan says, “He started his career at Pat McGrath, and he was at Charlotte Tilbury and saw her go from zero to 1.3 billion [pounds]. He believes that we can be the next $1 billion brand.”

Asked about the pitch he gives possible investors in that next potentially $1 billion brand, Khan responds, “I’m coming to you after having de-risked the deal. If I had come to you three years ago, you would have said, ‘You’re not a makeup artist or celebrity. Go to Sephora, and there are hundreds of brands. You are going to drown. Why should I support you?’ In the last two and a half years, we have proven we are special.”

To date, Khan says he’s invested $900,000 in Citizen Cosmetics and has drawn $2.2 million from friends and family members to put into it. Outside of CTZN Cosmetics, Citizen Cosmetics owns Smart Girls Get More, a mass-market brand it scooped up in 2018, and has invested in beauty tools player Beauty Magnet. In addition, Khan is the co-founder and managing director of TAKtical International, a holding company involved in transactions in the real estate, health care, consumer goods, technology, industrial and retail sectors estimated to be valued at $1.5 billion.

The investment in Beauty Magnet and pickup of Smart Girls Get More are just the beginning for Citizen Cosmetics. It plans to increasingly partner with or acquire brands generating under $1 million in sales and is casting a wide net for them spanning beauty tools, skincare, vitamins and self-care broadly. It’s particularly interested in brands with differentiated packaging and branding.

“My goal is to create a mini Estée Lauder,” says Khan. “People are coming out with phenomenal products and brands, but what they don’t have is staying power. There is so much more that goes into a business than creating a great product. I know there are going to be opportunities with brands to partner with them or flat out buy them.”