E.l.f. Beauty Shares Drop After Sales Fall Below Expectations
Strong demand for the Rhode brand helped E.l.f. Beauty grow by 14 percent in its latest quarter. However, shares fell by as much as 29 percent after the company issued a sales outlook below analysts' forecasts.
Rhode Acquisition and Growth Projections
This was E.l.f. Beauty's first earnings report since acquiring Rhode, the brand founded by Hailey Bieber. The company projects Rhode will grow by 40 percent in 2025 and contribute $200 million to combined sales this fiscal year.
Sales Performance and Forecast
Despite Rhode's strong performance, it could not fully offset slowing growth at E.l.f. Beauty overall. The company's second-quarter sales reached $344 million, up 14 percent, but still fell short of expectations. E.l.f. Beauty forecasted full-year growth of 18 to 20 percent, aiming for $1.57 billion in sales, which is below the average analyst forecast of $1.65 billion.
Sephora Launch and Market Impact
Rhode’s debut at Sephora on September 4 marked a major milestone. The launch “was by far the biggest launch Sephora North America has ever seen,” more than doubling initial sales of the previous record holder, according to E.l.f. Beauty CEO Tarang Amin.
"Rhode’s Sephora launch on Sept. 4 was by far the biggest launch Sephora North America has ever seen,” said Tarang Amin.
According to a TD Cowen research note, Rhode generated $15 million in sales in its first two days at Sephora. Before this debut, Rhode had achieved $40 million in quarterly sales through June 30, indicating some slowdown for the brand.
Company Forecast
E.l.f. Beauty anticipates that Rhode will reach $300 million in sales for the calendar year, representing a 40 percent growth.
Key Facts
- E.l.f. Beauty’s latest quarterly growth: 14% to $344 million in sales.
- Shares dropped by up to 29% after a below-forecast sales outlook.
- Rhode predicted to grow by 40% in 2025, adding $200 million to sales.
- Full-year sales forecast: $1.57 billion, below analysts' $1.65 billion estimate.
- Rhode’s Sephora launch generated $15 million in two days, the largest North America Sephora launch ever.
Summary: Despite Rhode's impressive Sephora launch and solid quarter, E.l.f. Beauty’s overall growth disappointed investors, leading to a sharp share price decline.