e.l.f. Beauty Inc (NYSE: ELF) says a “consumer hangover” following a strong holiday season contributed to weaker sales trends in January, which made it lower its full-year sales guidance on Thursday.
The cosmetics specialist now expects up to $1.31 billion in sales versus analysts at $1.34 billion.
Nonetheless, Tarang Amin – the company’s chief executive took a positive tone in a post-earnings interview, saying “we have a high degree of transparency.
If we see something, we pass it through.”
He also said that sales trends were expected to normalize later in 2025.
Investors, however, seem fairly disappointed considering e.l.f. Beauty stock is down nearly 30% today.
Why were e.l.f.’s sales trends weaker in January?
Other than the consumer hangover following a promotionally active period, CEO Amin attributed softness in January to about a 20% decline in e.l.f.’s “social commentary”.
The downside may have been related to LA wildfires or the prospect of a potential ban on TikTok in the US, the chief executive argued, adding both incidents could have kept users from posting about e.l.f. products last month.
Together, a consumer hangover and a decline in social commentary disabled a few of the company’s products from having a good start in 2025, according to Tarang Amin.
While the management stuck to an upbeat stance more broadly, investors should note that e.l.f. stock has been cut in half since mid-January.
e.l.f. Beauty downplays concerns of raised tariffs
CEO Amin also downplayed concerns of an additional 10% tariffs on all goods from China in his interview with Jim Cramer last night, saying the company has “an incredible price umbrella.”
He expressed confidence in e.l.f. Beauty’s ability to navigate the new tariffs while maintaining extraordinary value as the company has “greater supplier diversification and a much bigger international business.”
None of it, however, refutes the fact that e.l.f. Beauty missed earnings estimates in its recently concluded quarter and guided for continued weakness ahead on Thursday.
Plus, the possibility of e.l.f. having to raise prices to offset the impact of raised tariffs remains on the table, which could further weigh on sales moving forward.
If e.l.f. stock price crash a buying opportunity?
Much like investors, some analysts clearly disagree with Amin’s optimism as well.
Stifel’s Mark Astrachan, for example, lowered their price target on e.l.f. stock following the earnings, saying “company growth and market share gains are slowing.”
Until sales show signs of improvement, the Stifel analyst expects e.l.f. shares to remain range-bound. Others, including Piper Sandler analysts, also agree that “visibility is limited, which justified a valuation reset.”
The upside in e.l.f.’s earnings report last night was its quarterly sales that went up a better-than-expected 31% on a year-over-year basis to $355 million.
That said, e.l.f. Beauty stock does not currently pay a dividend to make it any more attractive for investors to remain loyal amidst the potential softness ahead. Note that e.l.f. also faced allegations of fraud from Muddy Waters in late 2024.
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