E.l.f. Beauty Shares Drop After Sales Miss Expectations
E.l.f. Beauty experienced strong growth driven by its Rhode brand, increasing overall sales by 14% in the latest quarter. However, the company’s shares fell as much as 29% following a weaker than expected sales forecast.
Rhode Brand Performance and Forecast
This quarter marked E.l.f. Beauty’s first earnings report since acquiring Rhode, founded by Hailey Bieber. The company projects Rhode’s growth at 40% in 2025, anticipating the brand will add $200 million to the combined sales in the current fiscal year.
E.l.f. Beauty CEO Tarang Amin said, "Rhode’s Sephora launch on Sept. 4 was by far the biggest launch Sephora North America has ever seen," doubling the initial sales of the previous record holder.
Sales Figures and Market Reaction
Despite Rhode’s strong launch, E.l.f. Beauty’s total sales in the second quarter reached $344 million, up 14%. However, sales fell short of expectations, and the forecasted full-year growth of 18 to 20%, with sales reaching $1.57 billion, lagged behind the analyst consensus of $1.65 billion.
- Shares dropped by as much as 29% in after-hours trading.
- Rhode generated $15 million in sales during its first two days at Sephora, according to TD Cowen research.
- Before debuting at Sephora, Rhode achieved $40 million in quarterly sales through June 30, indicating a slowdown.
Future Outlook
E.l.f. Beauty expects Rhode to reach approximately $300 million in sales for the calendar year, reflecting a 40% growth rate.
Summary: E.l.f. Beauty's strong growth driven by Rhode is overshadowed by cautious sales forecasts, leading to a sharp drop in shares despite record-breaking product launches.