e.l.f. Beauty Inc (NYSE:ELF) shares fell 34% after the beauty company issued weaker-than-expected full-year guidance and reported a fiscal second quarter sales miss.
For the full year, the company guided adjusted EPS between $2.80 and $2.85, below analysts’ estimates of $3.53, and expects revenue of $1.55 billion to $1.57 billion, under the $1.65 billion consensus.
For fiscal Q2, the quarter ended September 30, e.l.f. Beauty reported EPS of $0.68, ahead of the $0.57 forecast, with sales up 14% year-over-year to $343.9 million, though short of the $366.4 million expected.
Gross margin declined 165 basis points to 69%, attributed to tariff costs.
“Our Q2 results, which included 140 basis points of market share gains for our namesake e.l.f. brand and a record-breaking launch of Rhode in Sephora North America, are a continuation of the consistent, category-leading growth we’ve delivered over the past 27 quarters,” CEO Tarang Amin said in a statement.
“We remain confident in our strategy to grow market share and capitalize on the significant whitespace ahead of us.”
Bank of America noted that Q2 sales were softer than expected due to shipments lagging consumption, particularly at Target and Amazon, and slower international growth following the lapping of e.l.f. Beauty’s Rossmann Germany launch.
Rhode was a bright spot, generating $52 million in partial-quarter sales and $110 million for the full quarter, marking the largest launch in Sephora North America history, exceeding the prior record by 2.5x.
Despite the weak guidance, Bank of America reiterated a Buy rating on e.l.f. Beauty, citing a compelling setup and expected improvement in execution, though it lowered its price target to $130 from $160.
With the 34% slump on Thursday, e.l.f. Beauty shares traded hands at $77.
“Despite noise in fiscal Q2 and weaker than expected guidance on a total company basis, we reiterate our 'Buy' rating as we see a compelling setup with potentially conservative guidance on Rhode, and we expect execution to improve into fiscal year 2027,” Bank of America wrote.
The bank’s analysts expect adjusted EBITDA for fiscal year 2026 to come in at $302 million to $306 million, down from prior estimates due to higher marketing spend and SG&A expenses.