Elf Beauty (ELF) Q2 2026 earnings

Hailey Bieber’s cosmetics line Rhode is expected to grow The beauty of the goblinIts annual sales hit $200 million this fiscal year, but its new parent’s full-year guidance remains below expectations, sending its shares down 29% on Wednesday.

Elf, which declined to issue full-year guidance last quarter, expects full-year revenue to be between $1.55 billion and $1.57 billion, which would mean sales growth of 18% to 20%. That’s well below analysts’ expectations of $1.65 billion, according to LSEG.

In an interview with CNBC, CEO Tarang Amin said Rhode, which the company acquired earlier this year in a massive $1 billion deal, is expected to increase its annual sales by $200 million this fiscal year and by $300 million on an annual run rate basis.

Rhode’s expected contribution to sales represents approximately 13% of its revenue forecast, highlighting how important the deal is to Elf’s future as its aggressive growth continues to moderate. It shows that Elf needs Rhode to help it grow in the coming quarters and without the acquisition, the potential for higher revenues would have been much lower.

On the profitability side, Elf expects full-year adjusted earnings per share to be between $2.80 and $2.85, well below expectations of $3.58, according to LSEG.

In addition to guidance, Elf missed revenue estimates but beat earnings in its fiscal second-quarter results.

Here’s how the beauty company’s performance compared to what Wall Street expected, based on a survey of analysts conducted by LSEG:

• EPS: 68 cents were revised versus 57 cents expected
• profit: $344 million versus $366 million expected

The company’s reported net income for the three-month period ended Sept. 30 was $3 million, or 5 cents per share, compared with $19 million, or 33 cents per share, a year earlier. Excluding one-time items related to stock-based compensation and other non-recurring charges, Elf saw earnings of 68 cents per share.

Sales rose to $344 million, up about 14% from $301 million the previous year.

Amin blamed the revenue and guidance errors on the fact that the company did not issue guidance in the latest quarter, which he said could have affected consensus estimates.

“We actually believe that the sales that we have provided as well as the guidance on net sales are very strong,” he said.

Elf, which imports its makeup primarily from China, has seen its profitability decimated by new tariffs imposed by President Donald Trump. During the quarter, its net income fell a staggering 84% while the company said its gross margin fell 1.65 percentage points, driven primarily by higher tariff costs.

Amin said the second quarter is expected to see the biggest hit from the tariffs, and the impact is expected to taper off sequentially from there.

“In response to the tariffs, we raised our prices by $1, effective August 1, so you are seeing the impact of the tariffs below pricing in this quarter,” Amin said. “In the second half of the year, the gross profit margin will improve sequentially.

In the absence of major product launches from its namesake brand, which Amin said is currently in the works, Rhode is Elf’s primary growth driver and currently, the business is growing at about 40% year-on-year, he said.

It launched in Sephora stores nationwide in September and was the largest brand launch the North American retailer had seen in its history, Amin said.

“It was two and a half times larger than number two, [Sephora’s] “The second largest launch ever, so it performed very well,” Amin said. “We continue to see amazing potential for growth, not only in North America where we just launched and in the UK where we are about to launch, but also internationally. … We definitely see the global potential for this brand and see it as much greater than it is today.”