Elf Beauty raises annual forecasts as value bet pays off

Elf expects fiscal 2027 net sales of $1.94 billion to $1.97 billion, compared with a prior projection of $1.84 billion to $1.87 billion.

It forecast annual adjusted profit of $3.50 to $3.55 per share, compared with a prior forecast of $3.27 to $3.32.

Elf said its net sales rose 36% to $479.4 million in the quarter ended June 30 from a year ago, beating analysts' average estimate of $429.5 million, according to data compiled by LSEG.

First-quarter adjusted profit per share of $1.75 topped estimates of 71 cents.

Elf, which launched haircare products in the quarter, reported a gross margin increase of 1,400 basis points, including a 1,050-basis-point benefit from tariff refunds.

Elf Beauty on Wednesday raised its annual sales and profit forecast, signaling momentum from strong demand for its affordable beauty, makeup and skincare products amid strained consumer spending.

The company, which offers about 75% of its products at $10 or less, has been attracting consumers grappling with sticky inflation and higher food and gas prices in the U.S.

Elf said it lowered prices on 10% of its portfolio after testing its pricing strategy this quarter to see if it would drive 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," CFO Mandy Fields told Reuters.

The company said it is focused on international expansion, with 20% of its sales outside the U.S., compared to competitors having over 70%.