Elf Beauty said it has increased its annual sales and earnings outlook following a quarter of robust demand for its low-price beauty and skincare portfolio, signaling continued consumer interest in value-oriented personal care amid persistent household inflationary pressures.
The company noted that roughly 75% of its assortment is priced at $10 or less, a positioning management says resonates with shoppers facing elevated food and fuel costs. As part of a recent pricing experiment, Elf lowered prices on 10% of its portfolio to test whether reduced price points would lift volumes.
"(Elf is) really just continuing to highlight value for our consumers because it’s very important, just given the inflationary pressures they’re facing today," said CFO Mandy Fields.
International expansion remains a strategic priority. Elf reported that about 20% of its sales currently come from markets outside the U.S., well below competitors that derive more than 70% from international channels - a gap management described as a "big white space opportunity." As part of its rollout plans, the company said Rhode - acquired last year - will launch in 19 European countries next month, and the Elf brand will debut in Brazil, both initiatives undertaken in partnership with makeup retailer Sephora.
On guidance, Elf now expects fiscal 2027 net sales in a range of $1.94 billion to $1.97 billion, raised from a prior projection of $1.84 billion to $1.87 billion. The company also lifted its annual adjusted earnings forecast to $3.50 to $3.55 per share, up from a prior range of $3.27 to $3.32.
Operational results for the quarter reflected the sales momentum. Elf reported net sales of $479.4 million for the quarter ended June 30, a 36% increase year-over-year, topping analysts' average estimate of $429.5 million as compiled by LSEG. Adjusted earnings per share for the quarter were $1.75, above consensus estimates of $0.71.
Product development and category expansion featured in the quarter - the company launched haircare products during the period. Gross margin improved markedly, increasing by 1,400 basis points year-over-year, a change that included a 1,050-basis-point benefit from tariff refunds.
Management emphasized the interplay of pricing, assortment and international distribution as central to the company's current momentum. The firm tested selective price reductions to evaluate volume response, maintained a heavily value-oriented assortment, and is accelerating distribution outside the U.S. via retail partnerships.
While the company cited multiple drivers of its improved outlook - from tactical pricing to tariff-related margin benefits and new product introductions - it also signaled that execution of international expansion and the sustainability of pricing and margin gains will be areas to watch as it moves toward its updated fiscal 2027 targets.