E.l.f. Beauty Shares Drop After Sales Miss Forecasts
E.l.f. Beauty reported weaker-than-expected sales for its latest quarter, sending its stock down by as much as 29 percent in after-hours trading. Despite strong growth from its newly acquired brand Rhode, the results failed to meet analyst expectations.
Rhode Drives Growth but Can’t Offset Slowdown
The company said overall sales for the second quarter rose 14 percent to $344 million. While this growth was supported by strong demand for Rhode, it was not enough to counteract slowing momentum elsewhere in the business.
“Rhode’s Sephora launch on Sept. 4 was by far the biggest launch Sephora North America has ever seen,” said E.l.f. Beauty chief executive Tarang Amin to The Business of Beauty.
Rhode, founded by Hailey Bieber, achieved $15 million in sales within its first two days at Sephora, according to TD Cowen. Before the launch, Securities and Exchange Commission filings showed the brand had $40 million in sales through June 30, reflecting some deceleration.
Forecast Falls Short of Expectations
E.l.f. projects Rhode will expand by 40 percent in 2025, contributing $200 million to E.l.f.’s total sales this fiscal year. However, its forecast for full-year growth of 18 to 20 percent, or roughly $1.57 billion in revenue, was below the $1.65 billion expected by analysts.
Analysts React to the Outlook
Despite impressive early traction from Rhode’s expansion, investors expressed concern that E.l.f.’s overall trajectory may be slowing, raising questions about its ability to sustain recent momentum.
Author’s Summary: E.l.f. Beauty’s stock plunged after its second-quarter results and forecasts failed to match expectations, even as Rhode’s rapid growth brought significant momentum overall.