e.l.f. Beauty raised its full-year sales growth outlook to 22%–24%, up from its previous range of 18%–20%, saying marketing campaigns and the international expansion of its prestige brand Rhode are expected to keep drawing shoppers.
Net sales rose 51% year over year to $520.8 million, topping analysts’ estimate of $470.3 million. The company said U.S. and international retail and e-commerce sales contributed to the increase. Net income was $30 million on a GAAP basis, below the $34.9 million analysts had expected.
Rhode has expanded into 19 European countries through LVMH-owned Sephora stores, although the brand is available in fewer than 40% of Sephora locations. e.l.f. Chief Financial Officer Mandy Fields told Reuters that 75% of Rhode’s following is outside the U.S., making international growth a significant opportunity.
The company said it reinvested $52 million in IEEPA tariff refunds in marketing and price reductions on about 10% of its products. Fields said the refunds were a one-time benefit, so marketing spending is not expected to stay at the same level next fiscal year.
Gross margin increased by about 160 basis points to 71%, above analysts’ 70.2% estimate. e.l.f. expects margin pressure as Rhode expands into more physical stores, while continuing to forecast strong profit margins. Selling, general and administrative expenses rose by $69 million to $300.1 million, exceeding the $277.8 million analysts had expected, as marketing, merchandising and distribution costs increased.
Fields said the company is directing capital toward business growth, technology and AI investments, and its presence in retail stores. Chief Executive Tarang Amin said on Wednesday’s earnings call that e.l.f. plans to expand its haircare line into additional stores, using a strategy similar to the one it applied to skincare.
Sources: Investing.com News.