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Elf Beauty projects annual sales, profit below estimates despite upbeat Q4

Published 05/22/2024, 04:09 PM
Updated 05/22/2024, 04:11 PM
© Reuters. FILE PHOTO: Tarang Amin (C), Chairman and CEO of cosmetics company e.l.f. Beauty Inc., rings the opening bell at the New York Stock Exchange (NYSE) to celebrate his company's IPO in New York City, U.S. September 22, 2016.  REUTERS/Brendan McDermid/File Ph
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By Granth Vanaik

(Reuters) - Elf Beauty projected annual sales and profit below Wall Street expectations on Wednesday, in a sign that sticky inflation has left little room for Americans to spend on affordable luxuries such as cosmetic and skincare products.

However, the California-based firm topped estimates for fourth-quarter revenue and profit.

WHY IT'S IMPORTANT

While beauty companies such as Elf managed to sustain the post-pandemic demand boom, the forecast indicates that still-high food prices and interest rates have forced customers to prioritize needs-based goods over discretionary purchases.

CONTEXT

Last month, retailer Ulta Beauty (NASDAQ:ULTA) flagged a slowdown in demand across categories in the first quarter.

U.S. retail sales for cosmetics and beauty products are expected to grow by 6.9% in 2024, compared with 10.5% increase seen in 2023, according to data analytics firm Emarketer.

Analysts at UBS have also noted that Elf has a history of providing conservative full-year targets.

KEY QUOTE

"We do like to take things one quarter at a time ... it's very hard to kind of grow 80% on top of 80%," said CEO Tarang Amin in an interview with Reuters, adding that the first initial outlook is "very strong."

Amin also noted that Elf is seeing overall "good behavior" from a consumer standpoint.

BY THE NUMBERS

Elf expects 2025 sales to be between $1.23 billion and $1.25 billion, below expectations of about $1.27 billion, according to LSEG data.

The company expects annual adjusted profit to be between $3.20 and $3.25 per share, versus estimates of $3.51 apiece.

Net sales rose 71.4% to $321.1 million in the fourth quarter, beating estimates of about $292.6 million. In the previous quarter, sales grew by 84.9%.

© Reuters. FILE PHOTO: Tarang Amin (C), Chairman and CEO of cosmetics company e.l.f. Beauty Inc., rings the opening bell at the New York Stock Exchange (NYSE) to celebrate his company's IPO in New York City, U.S. September 22, 2016.  REUTERS/Brendan McDermid/File Photo

It posted adjusted profit of 53 cents per share, topping expectations of 32 cents.

GRAPHIC

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