Key facts
- Elf Beauty raised full-year sales guidance to 22-24% from a prior range of 18-20%.
- Net sales rose 51% to $520.8 million, beating Wall Street expectations of $470.3 million.
- GAAP net income was $30.0 million, missing estimates of $34.9 million.
- Gross margin rose about 160 basis points to 71%, beating analyst expectations of 70.2%.
- SG&A expenses rose $69.0 million to $300.1 million, above the $277.8 million analysts expected.
- CFO Mandy Fields said 75% of Rhode's following is outside the US.
Elf Beauty raised its full-year sales guidance to a range of 22-24% from 18-20% on November 4, saying marketing campaigns and the international expansion of its prestige brand Rhode were expected to keep attracting shoppers. The Oakland, California-based cosmetics company reported net sales of $520.8 million for the quarter, up 51% from a year earlier and above Wall Street expectations of $470.3 million. It said US and international retail and e-commerce sales drove the growth.
GAAP net income was $30.0 million, missing estimates of $34.9 million. Gross margin rose about 160 basis points to 71%, beating analyst expectations of 70.2%. Selling, general and administrative expenses rose $69.0 million to $300.1 million as the company spent more on marketing, merchandising and distribution in the US and internationally; analysts had expected $277.8 million.
Chief Financial Officer Mandy Fields told Reuters that 75% of Rhode's following is outside the US, calling international growth a big opportunity for the brand. Rhode, which Elf acquired in August last year, expanded to 19 countries in Europe through LVMH's Sephora stores. Elf said it reinvested $52 million in IEEPA tariff refunds into marketing campaigns and price cuts on about 10% of its products. Fields said that given the one-time nature of the refund payments, the marketing spend is not expected to remain constant into next year, and the company will have to right size it as it enters the next fiscal year. She said Elf is focusing capital allocation on growing the business, technology and AI investments, and brand presence in retail stores.