E.l.f. Beauty Shares Drop After Sales Disappoint
Strong demand for Rhode helped E.l.f. Beauty achieve 14% growth in its latest quarter, but a lower-than-expected sales forecast caused shares to fall by up to 29% in after-hours trading.
Rhode Acquisition and Growth Projections
This is E.l.f. Beauty's first earnings report after acquiring Rhode, the brand founded by Hailey Bieber. The company expects Rhode to grow by 40% in 2025 and contribute $200 million to overall sales in this fiscal year.
Sales Performance and Forecast
- Rhode’s strong sales were not enough to offset slowing growth at E.l.f.
- Second-quarter sales rose 14% to $344 million but fell short of expectations.
- Full-year sales growth is forecasted at 18% to 20%, reaching $1.57 billion, below analysts’ average estimate of $1.65 billion.
Sephora Launch Success
Rhode’s launch at Sephora North America on September 4 was the largest ever for the retailer, more than doubling the previous record held by E.l.f. Beauty.
"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, E.l.f. Beauty chief executive Tarang Amin told The Business of Beauty."
According to TD Cowen, the brand made $15 million in sales during its first two days at Sephora.
Previous Sales and Outlook
Before launching at Sephora, Rhode's quarterly sales had slowed to $40 million as of June 30, according to SEC filings. The company predicts Rhode will grow 40% to $300 million in calendar year sales.
Summary: E.l.f. Beauty’s shares fell sharply due to a sales forecast below expectations, despite strong growth from its Rhode acquisition and a record-breaking Sephora launch.
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