Key Takeaways
- E.l.f. Beauty surpassed Q4 projections with $449M in revenue compared to the $423M forecast and adjusted EPS of 32 cents versus the 29-cent estimate.
- Management announced plans to experiment with reduced pricing on certain items following a $4 price reduction on Halo Glow tint that generated nearly 40% higher sales.
- Shares of ELF stock jumped approximately 7-8% during after-hours trading post-earnings announcement.
- Fiscal 2027 annual projections fell below analyst expectations for both revenue and earnings metrics.
- Management warned of a possible $15M–$20M headwind from elevated oil prices connected to Middle East conflict, which isn’t factored into existing guidance.
E.l.f. Beauty delivered impressive fiscal fourth-quarter results on Wednesday, reporting $449 million in revenue that exceeded Wall Street’s $423 million projection. The company’s adjusted earnings per share reached 32 cents, surpassing the analyst consensus of 29 cents.
Shares of ELF stock advanced roughly 8% in extended trading following the earnings announcement.
However, investor enthusiasm was somewhat dampened by the company’s forward-looking statements. The fiscal 2027 projections disappointed across both revenue and profit measures, creating a mixed sentiment around the report.
Management projects full-year revenue between $1.84 billion and $1.87 billion. The guidance midpoint comes in below the $1.87 billion Wall Street anticipated. Meanwhile, adjusted EPS guidance ranging from $3.27 to $3.32 significantly trailed the $3.61 analyst consensus.
The quarterly results included one notable complication: a $57.6 million charge related to the Rhode acquisition, reflecting the brand’s better-than-anticipated performance. This charge resulted in a GAAP net loss of $49.4 million for the period. Excluding this adjustment, the company generated net income of $19.4 million.
Strategic Pricing Adjustments Ahead
CEO Tarang Amin explained to CNBC that consumer behavior has shifted as elevated gasoline costs and general inflation continue to pressure household budgets. Volume sales have weakened more significantly than anticipated in recent periods.
“We’ve seen units drop off a bit more in the last few months as consumers have particularly been suffering with higher costs,” Amin said.
Management recently experimented with lowering the price of its $18 Halo Glow skin tint by $4, which generated a remarkable sales increase of nearly 40%. This experiment demonstrated the heightened price sensitivity among current shoppers.
Consequently, E.l.f. intends to reverse some price increases implemented last August, when the company raised prices by $1 across its primary product range to counteract tariff expenses. Further pricing tests at reduced levels are planned for additional products.
The beauty company incurred approximately $58.5 million in tariff payments and is currently pursuing refunds after the Supreme Court struck down the tariffs. CFO Mandy Fields indicated these refunds, combined with ongoing cost-reduction initiatives, should help mitigate margin pressure from the planned price cuts.
Gross margin expanded by 1.4 percentage points to reach 73% in the quarter, benefiting partly from those price increases that are now being reconsidered.
Rhode Brand Powers Growth
Rhode has emerged as E.l.f.’s primary growth catalyst throughout the past year. The celebrity-backed brand experienced 80% sales growth, fueled by its expansion into Sephora North America, Sephora UK, and Mecca, where it currently ranks as the top brand across all three retail partners.
This upcoming fall, Rhode will expand its presence across 19 additional European markets through Sephora.
E.l.f. also highlighted a potential $15 million to $20 million fiscal 2027 challenge stemming from higher oil costs associated with the U.S.-Israeli conflict with Iran. This potential impact has not been incorporated into current guidance figures.
Fields noted that approximately 75% of E.l.f.’s manufacturing occurs in China. Management reported no evidence of consumers trading down to cheaper alternatives yet, with beauty spending remaining resilient.
Amin confirmed that mergers and acquisitions remain part of the company’s strategic roadmap, though current priorities emphasize driving organic expansion from the existing brand portfolio.
