The beauty of the goblin The retailer reported its first billion-dollar fiscal year on Wednesday as sales rose 77%, but the retailer expects its growth to slow in the current fiscal year.
The eye, lip and face company, known for its viral marketing and knack for attracting younger consumers, issued guidance that was lower than analysts expected.
Shares of Elf initially fell after releasing its report, but later jumped after the company indicated its guidance was conservative.
“Last year, we started our guidance at a range of 22% to 24%, and ended the year at 77%,” CFO Mandy Fields told analysts. “I'm not saying we're at 77% this year for sure. But what I will say is that gives you a little bit of insight into our guiding philosophy and what's worked well for us over the last five years, taking it one quarter at a time.”
Shares closed up about 19% on Thursday.
Here's what Elf Beauty did in its fiscal fourth quarter compared to what Wall Street expected, based on a survey of analysts conducted by LSEG:
Earnings per share: 53 cents adjusted vs. 32 cents expected Revenue: $321.1 million vs. $292.6 million expected
The company reported net income for the three-month period ended March 31 of $14.53 million, or 25 cents per share, compared with $16.25 million, or 29 cents per share, a year earlier. Excluding one-time items, Elf reported earnings of 53 cents per share.
Sales rose to $321.1 million, up about 71% from $187.4 million the previous year.
For the full year, the company's sales rose to $1.02 billion, an increase of 77% from the same period last year.
Elf Beauty has been on a tear over the past year, posting high-double-digit sales gains quarter after quarter as consumers flock to lower-priced beauty products either through its own website or at retailers like Walmart And Goal.
Tarang Amin, Elf's CEO, said in a statement that he believes the company is still in the “early stages” of its growth story, and expects more to come in the cosmetics and skincare space and in international markets. Its guidance reflects that sentiment, but despite this, the company expects to grow at a slower pace than Wall Street expected.
Elf expects net sales to be between $1.23 billion and $1.25 billion, representing an increase of 20% to 22%. This is less than the $1.27 billion, or 27.4%, that analysts had expected.
The company expects adjusted net income to range between $187 million and $191 million, and adjusted earnings to range between $3.20 and $3.25 per share. This is lower than the $3.51 that analysts expected, according to LSEG.
Last month, Ulta Beauty CEO Dave Kimble threw cold water on the hot beauty category when he warned that demand for cosmetics was declining, sending its shares down 15% that day and hitting Elf's stock. Estee Lauder And Kuti.
“We've seen a slowdown in the overall category,” Kimball said at an investor conference hosted by JPMorgan Chase. “We entered the year — and we talked about this on our (earnings) call a few weeks ago — expecting the category to moderate. It (has), as I said, seen several years of strong growth. We didn't expect that to continue at the rate it was growing.”
He added that the slowdown was “a little earlier” and “a little bigger than we thought.”
It remains to be seen how much Ulta's sales will slow, but the beauty giant has seen strong sales of its Elf products. During a call with analysts, Amin said it grew its business with Ulta by 80% in fiscal 2024 — “well above overall growth rates.”
Read Elf's full earnings release here.
