In its first fiscal quarter since President Donald Trump’s tariffs were announced, cosmetics company E.l.f. Beauty reported a 30% decline in net income, causing its shares to fall nearly 11% the day after its earnings report. E.l.f. is sourcing 75% of its products from China.
Yet the company’s CEO, Tarang Amin, said he’s focused on E.l.f.’s 26 consecutive quarters of net sales growth, the company’s international and retail expansions, and the new $1 billion acquisition of Hailey Bieber’s popular skincare brand, Rhode.
“We’ve been able to prove people wrong for 26 straight quarters,” said Amin. “So we’re not worried about any short-term stock reaction,” he said.
“We feel that this consistency of our delivery in the end of the day is the most important thing. And people always come around,” Amin added.
E.l.f.’s affordable-yet-premium products have gone viral on social media thanks to the rise of “dupe culture,” and a focus on marketing on TikTok, Roblox and even during the Super Bowl.
E.l.f. Cosmetics was the No. 1 color cosmetics brand in the U.S. by units sold — and No. 2 by dollar share — in 2024, according to the company. It’s also the most purchased brand by Gen Z, Gen Alpha and millennial consumers, the company says.
“We do think that over time, they will eventually be the No. 1 mass cosmetics company globally,” said Anna Lizzul, a Bank of America Securities analyst covering household, personal care and beauty.
E.l.f. is also challenging legacy players like Estée Lauder and L’Oréal, and it celebrated its first billion-dollar fiscal quarter in May 2024 after sales spiked 77%, though its net sales have slowed in the following quarters.
The Rhode deal also will now bring E.l.f. into Sephora stores in the U.S. this fall. Though the company is financing the deal with $600 million of debt, experts are cautiously optimistic. Rhode grew to $212 million in net sales in just three years, according to E.l.f.
“I think there’s a very good chance that this turns out to be pretty heavily accretive. So, through that lens, I like them getting scrappy and figuring it out,” said Baird Managing Director Jon Tenan.
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