E.l.f. Beauty Shares Drop as Sales Miss Expectations
Despite strong momentum from its recent acquisition, E.l.f. Beauty faced a sharp market reaction after sales fell short of estimates. Shares dropped nearly 29 percent following the release of its second-quarter earnings.
Rhode’s Contribution and Outlook
The company credited robust demand for Hailey Bieber’s Rhode brand for helping boost overall growth by 14 percent in the last quarter. E.l.f. projected Rhode will expand by about 40 percent in 2025, adding $200 million in revenue to the combined business this fiscal year.
Slowing Growth and Forecast
Even with Rhode’s solid performance, E.l.f.’s growth has moderated. Second-quarter sales rose to $344 million, but results came in below expectations. Full-year revenue is now forecast to climb 18–20 percent, reaching $1.57 billion—below analysts’ $1.65 billion average estimate.
Record-Breaking Sephora Launch
“Rhode’s Sephora launch on September 4 was by far the biggest launch Sephora North America has ever seen,” said E.l.f. Beauty chief executive Tarang Amin, noting it more than doubled the initial sales of the previous record holder.
Research by TD Cowen reported that Rhode made $15 million in sales in its first two days at Sephora. However, filings with the Securities and Exchange Commission revealed the brand’s sales slowed to $40 million for the quarter ending June 30. The company still expects Rhode to reach $300 million in sales for the calendar year, representing 40 percent annual growth.
Author’s Summary
Despite a strong debut for Rhode, E.l.f. Beauty’s quarterly sales and outlook lagged forecasts, triggering a stock decline of nearly 30 percent.