E.l.f. Beauty Shares Drop After Sales Disappoint
E.l.f. Beauty's growth was driven by strong demand for Rhode, boosting the company's revenue by 14% in the latest quarter. However, shares fell up to 29% after the company issued a sales forecast below analysts' expectations.
Rhode Acquisition and Growth Projections
In its first earnings report following the acquisition of Rhode, E.l.f. Beauty projected that the Hailey Bieber-founded brand would grow by 40% in 2025. The company expects Rhode to contribute $200 million to combined sales in the current fiscal year.
Sales Performance and Market Reaction
- Rhode’s strong sales were not enough to compensate for the slowing growth of E.l.f.
- Second-quarter sales reached $344 million, a 14% increase from the previous year.
- Sales fell short of expectations, with a full-year sales forecast of $1.57 billion—below the $1.65 billion average analyst estimate.
- Following the forecast, shares plunged as much as 29% in after-hours trading.
Successful Sephora Launch
"Rhode’s Sephora launch on Sept. 4 was by far the biggest launch Sephora North America has ever seen," said Tarang Amin, E.l.f. Beauty CEO, referring to the launch.
According to TD Cowen research, Rhode generated $15 million in sales during its first two days at Sephora. Before this launch, SEC filings indicated quarterly sales of $40 million through June 30—signaling a slowdown for the brand.
Rhode’s Future Outlook
The company forecasts Rhode’s sales to grow 40% to $300 million in the calendar year.
Author’s summary: E.l.f. Beauty’s shares tumbled following a cautious sales outlook despite Rhode’s strong launch, highlighting challenges in sustaining overall growth.