e.l.f. Beauty’s shares plummeted more than 20% in extended trading following a revision of its annual sales and profit forecasts. The company attributed the decline to weakening demand within the mass beauty sector.
Revised Forecasts and Adjusted Expectations
The beauty brand now expects its annual sales to fall between $1.30 billion and $1.31 billion, down from the prior projection of up to $1.335 billion. Additionally, e.l.f. reduced its profit forecast, now anticipating earnings of $3.27 to $3.32 per share, compared to the previous estimate of $3.47 to $3.53.
Weaker Demand and Slower Product Launches
CEO Tarang Amin highlighted that demand in the mass beauty channel was softer in January. He noted that several of the brand’s new product launches had not gained traction as quickly as expected. e.l.f.’s key demographic, Gen Z consumers, face mounting distractions from economic instability, political concerns, and the uncertain future of platforms like TikTok, all of which could affect brand engagement.
External Factors Contributing to Challenges
The company also faces additional pressure from a 10% tariff on imports from China, where 80% of e.l.f.’s products are still manufactured. This tariff may lead to price hikes, further impacting consumer demand.
Quarterly Sales Perform Above Expectations
Despite these challenges, e.l.f. Beauty saw a 31% increase in Q3 sales, reaching $355.32 million, surpassing analyst expectations of $329.67 million.
Factors Behind the Downward Revision
While e.l.f. Beauty experienced strong growth in previous quarters, slower-than-anticipated product launches, combined with ongoing economic uncertainties, have led to a revised outlook for the fiscal year. The company’s updated forecast reflects these challenges as it navigates a shifting beauty landscape.
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