Hailey Bieber’s cosmetics line Rhode is expected to boost E.l.f. Beauty’s annual sales by $200 million this fiscal year. However, E.l.f.’s full-year guidance fell below expectations, causing its stock to plummet 29% on Wednesday. E.l.f. predicts full-year revenue to be between $1.55 billion and $1.57 billion, implying 18% to 20% sales growth.
CEO Tarang Amin stated that Rhode is projected to increase E.l.f.’s annual sales by $200 million this fiscal year and $300 million on an annual run rate basis. Rhode’s expected contribution to sales represents about 13% of its revenue forecast, emphasizing the importance of the acquisition for E.l.f.’s future growth.
E.l.f. expects full-year adjusted earnings per share to be between $2.80 and $2.85, significantly lower than expectations of $3.58. The company missed revenue estimates but exceeded earnings in its fiscal second quarter results. Earnings per share were 68 cents adjusted vs. 57 cents expected, and revenue was $344 million vs. $366 million expected.
E.l.f.’s profitability has been impacted by President Donald Trump’s tariffs, with net income falling by 84% during the quarter. The company attributed a 1.65 percentage point decrease in gross margin to higher tariff costs. Despite these challenges, E.l.f. anticipates sequential improvement in gross margin in the second half of the year.
Rhode is currently E.l.f.’s primary growth driver, with the business growing by about 40% year over year. The brand launched in Sephora stores nationwide in September, becoming the biggest brand launch in North America in Sephora’s history. E.l.f. sees significant growth potential for Rhode internationally, with plans to expand into the UK market.
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