E.l.f. Beauty Shares Drop After Sales Disappoint
Strong demand for Rhode helped E.l.f. Beauty grow by 14% in its latest quarter. However, the company’s shares fell up to 29% due to a sales forecast that missed expectations.
Rhode Acquisition Impact
This earnings report was the first since E.l.f. Beauty acquired the Hailey Bieber-founded brand, Rhode. The company projected Rhode would grow 40% in 2025 and contribute $200 million to sales during the current fiscal year.
Sales Performance and Forecast
Despite Rhode’s success, E.l.f. Beauty’s overall growth has slowed. Second-quarter sales came in lower than expected, and the full-year sales forecast of $1.57 billion with 18-20% growth was below analysts’ average estimate of $1.65 billion. This caused shares to drop sharply in after-hours trading.
Second Quarter Results
- Overall sales rose 14% to $344 million.
- Rhode’s launch at Sephora on September 4 was described as the biggest ever for Sephora North America, more than doubling previous records.
- According to TD Cowen’s research note, Rhode achieved $15 million in sales during its first two days at Sephora.
"Rhode’s Sephora launch on Sept. 4 ‘was by far the biggest launch Sephora North America has ever seen,’ more than doubling the initial sales of the previous record holder," said E.l.f. Beauty CEO Tarang Amin.
Prior Sales and Forecast
Before its Sephora debut, Rhode had generated $40 million in quarterly sales through June 30, indicating some slowdown. The company now expects Rhode to grow 40% to $300 million for the calendar year.
Author’s Summary
E.l.f. Beauty’s shares fell sharply as strong Rhode sales weren’t enough to offset broader revenue slowdown and cautious full-year projections.