Elf Beauty Lifts Annual Forecasts on Demand for Elastic Cosmetics; splits up

By Anuja Bharat Mistry

(Reuters) – Elf Beauty raised its annual sales and profit forecasts on Wednesday, betting on its efforts to sell cosmetics such as lip oil and liquid blush at affordable prices in the United States and abroad, sending the company’s shares up 18% in extended trading.

Customers looking for cheaper makeup and skincare products have helped boost Elf’s sales in a challenging market where big beauty brands such as Estee Lauder and L’Oreal have struggled to boost demand.

Elf expects net revenue in the range of $1.32 billion to $1.34 billion, compared to its previous forecast of $1.28 billion to $1.30 billion.

Elf’s strategy of introducing “dupes” of luxury cosmetics and pricing its products between $2 and $10 has further strengthened demand.

The California-based company has also expanded product offerings to mass retailers such as Walmart, Target and Amazon.com, helping it reach a wider customer base.

Price increases in international markets such as India and Germany and effective cost-cutting measures helped the company grow its gross margin by 40 basis points to 71% during the second quarter.

Elf has broad appeal across all income groups, CEO Tarang Amin told Reuters, adding that the company’s “strategy is to have the highest quality at an acceptable price or at an extraordinary price.”

It expects annual adjusted earnings per share between $3.47 and $3.53, up from its previous range of $3.36 to $3.41 per share.

Net revenue reached $301.1 million for the quarter ended Sept. 30, compared with analysts’ average estimate of $285.8 million, according to data compiled by LSEG.

On an adjusted basis, it earned a profit of 77 cents per share, beating analysts’ estimates of 43 cents per share.

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shailesh Kuber)