On Wednesday e.l.f. Beauty projected annual sales and profit earnings came below Wall Street expectations. However, the California-based firm e.l.f. Beauty topped estimates for Q4 revenue and profit. E.l.f., the beauty-products maker’s full-year earnings forecast came up short of expectations, in a sign that sticky inflation has left little room for Americans to spend on affordable luxuries such as cosmetic and skincare products.
E.l.f. Beauty stock slides
Shares of e.l.f. Beauty slid after hours on Wednesday after the beauty-products maker’s full-year forecast came up short of expectations amid concerns over an industry-wide slowdown. The e.l.f. Beauty shares initially sank more than 10% after hours on Wednesday, but pared back their losses to around 5.5%.
The stock’s drop came despite e.l.f. Beauty reporting a jump in sales during its fiscal fourth quarter and expressing optimism about further growth in the U.S. and abroad.
E.l.f. Beauty sales
The company which sells cosmetics and skincare products, including at retailers like Target Corp., Walmart Inc., and Ulta Beauty Inc. said it expects sales of $1.23 billion to $1.25 billion for the fiscal year ahead, with an adjusted per-share profit of $3.20 to $3.25.
E.l.f. Beauty earnings forecast
That forecast came in below expectations. For e.l.f. Beauty’s coming fiscal year, which wraps up at the end of next March, analysts had expected adjusted earnings per share of $3.56, with sales of $1.27 billion.
For its fiscal Q4 earnings, e.l.f. Beauty reported net income of $14.5 million, or 25 cents a share. That compared with $16.2 million, or 29 cents a share, in the same quarter last year.
Adjusted for stock-based compensation and other items, e.l.f. Beauty earned 53 cents a share. Net sales rose 71.4% to $321.1 million in the fourth quarter, beating estimates of about $292.6 million. In the previous quarter, sales grew by 84.9%.
Those results, on the other hand, were better than expected. Analysts polled by FactSet expected e.l.f. Beauty to report adjusted earnings per share of 33 cents, on sales of $292.6 million.
It posted adjusted profit of 53 cents per share, topping expectations of 32 cents.
Slowdown in beauty industry
The company’s report comes amid concerns of a broader slowdown in sales of beauty products, following years of growth seen as people began gathering in public again after pandemic lockdowns. In April, Ulta Beauty said that higher prices for basics, along with higher borrowing costs and rising consumer debt, were weighing on demand.
U.S. retail sales for cosmetics and beauty products are expected to grow by 6.9% in 2024, compared with 10.5% increase seen in 2023, according to data analytics firm Emarketer.
Room for growth
However, e.l.f. Beauty on Wednesday said there was still room for growth.
“We do like to take things one quarter at a time … it’s very hard to kind of grow 80% on top of 80%,” as per CEO Tarang Amin also that the first initial outlook is “very strong.”
“As we look ahead, we believe we are still in the early innings of unlocking the full potential we see for e.l.f. Beauty across cosmetics, skincare and international markets,” Tarang Amin,
Amin also noted that Elf is seeing overall “good behavior” from a consumer standpoint.
