E.l.f. Beauty Shares Drop After Sales Disappoint
Strong demand for Rhode contributed to E.l.f. Beauty's 14% growth in its latest quarter. However, a sales forecast that fell short of expectations caused shares to plunge by as much as 29% in after-hours trading.
Rhode's Impact on Growth
This was E.l.f. Beauty's first earnings report since acquiring Rhode, the brand founded by Hailey Bieber. The company projected a 40% growth for Rhode in 2025, expecting it to add $200 million to combined sales this fiscal year.
Despite Rhode's strong performance, it was not enough to offset slowing overall growth at E.l.f. Beauty. Sales in the second quarter missed expectations, with a forecasted full-year growth of 18-20% reaching $1.57 billion, below analysts’ average estimate of $1.65 billion.
Sales Performance and Launch Success
In Q2, total sales rose 14% to $344 million. Rhode’s launch at Sephora on September 4 was described by E.l.f. Beauty CEO Tarang Amin as “by far the biggest launch Sephora North America has ever seen,” more than doubling the initial sales of the previous record holder.
According to TD Cowen, Rhode generated $15 million in sales during its first two days at Sephora.
Before entering Sephora, SEC filings showed Rhode’s quarterly sales of $40 million through June 30, indicating some slowdown before the launch.
Future Sales Forecast
E.l.f. Beauty anticipates Rhode’s sales to grow 40% to approximately $300 million in its calendar year.
Author’s Summary
E.l.f. Beauty faces short-term challenges despite Rhode’s impressive Sephora debut, adjusting its forecast amid uneven sales growth.
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