By Arriana McLymore
NEW YORK, Nov 4 (Reuters) – Cosmetics company Elf Beauty raised its full-year sales guidance from a range of 18-20% up to 22-24%, as its marketing campaigns and the international expansion of its prestige brand Rhode were expected to continue attracting shoppers.
Elf’s net sales increased 51% to $520.8 million compared to last year, beating Wall Street expectations of $470.3 million. The Oakland, California-based company said US and international retail and e-commerce sales drove the growth.
“Seventy-five percent of Rhode’s following is outside of the US, so we know that international growth is a big opportunity for the brand,” Elf Chief Financial Officer Mandy Fields told Reuters.
Younger shoppers are gravitating to prestige cosmetics and skincare brands, a trend that Elf is also seeing with Rhode, which it acquired in August last year.
Elf reinvested $52 million in IEEPA tariff refunds into marketing campaigns and reducing the prices on about 10% of its products. Fields said that given the “one-time” nature of the tariff refund payments, the marketing spend is not expected to remain constant into next year.
“We’ll have to right size that (marketing spend) as we get into next fiscal year,” she said.
Elf is now focusing its capital allocation on growing the business, investments in technology and AI, and brand presence in retail stores, Fields said.
• Rhode expanded to 19 countries in Europe through LVMH’s Sephora stores.
• Net income was $30.0 million on a GAAP basis, missing estimates of $34.9 million.
• Gross margin increased about 160 basis points to 71%, beating analyst expectations of 70.2%.
• Selling, general and administrative (SG&A) expenses increased $69.0 million to $300.1 million as it spent more on marketing, merchandising and distribution costs in the US and internationally. Analysts expected a $277.8 million spend.
(Reporting by Arriana McLymore in New York; Editing by Jonathan Spicer )
