E.l.f. Beauty Shares Plunge as Sales Miss Forecasts
Despite robust demand for Rhode, E.l.f. Beauty’s revenue growth of 14 percent in the latest quarter failed to meet market expectations, sending its shares plunging as much as 29 percent in after-hours trading.
In its first earnings release after acquiring Rhode, the company projected that the Hailey Bieber-founded brand would expand by 40 percent in 2025, contributing $200 million in additional sales during the current fiscal year. However, this outlook did not offset E.l.f.’s overall slowdown.
Disappointing Sales Outlook
Second-quarter sales reached $344 million, representing a 14 percent increase but still below estimates. The full-year forecast of 18 to 20 percent growth, or about $1.57 billion in sales, missed the consensus analyst expectation of $1.65 billion.
Rhode’s Record-Setting Launch
“Rhode’s Sephora launch on Sept. 4 was by far the biggest launch Sephora North America has ever seen,” said E.l.f. Beauty CEO Tarang Amin.
The debut more than doubled the initial sales of the previous record holder. According to a TD Cowen research note, Rhode earned $15 million in its first two days at Sephora.
Market Performance and Forecast
Before its Sephora debut, SEC filings revealed Rhode had reported $40 million in sales through June 30, showing a deceleration in growth. The brand is now expected to expand by 40 percent to reach $300 million for its calendar year.
Author’s Summary
Despite Rhode’s impressive start, E.l.f. Beauty faced investor concerns as lower sales forecasts and slowing core growth triggered a steep decline in share value.