e.l.f. Beauty sales jump 36% as Rhode offsets namesake brand slump

e.l.f. Beauty reported Q1 sales of $479.4 million, up 36% from a year earlier and above the $433.1 million analysts expected.

"Rhode exceeded our expectations," Chief Financial Officer Mandy Fields said, citing the brand's wide appeal among consumers.

The strength of Rhode, the skincare and cosmetics brand founded by Hailey Bieber, helped offset sluggish sales for e.l.f.'s namesake brand, which slipped in the quarter. The company raised its full-year sales guidance on the back of the beat.

The results extend a run of double-digit growth for the New York-based cosmetics maker, which has built its mass-market franchise on viral launches and social-media-driven awareness. Rhode's debut at Sephora in North America and a record-breaking launch at Sephora UK made it the top-selling brand at the LVMH-owned retailer, according to the company's prior disclosures. The brand also anchors international expansion, with launches planned in Australia and New Zealand through Mecca.

Rhode's contribution has reshaped the portfolio. In the fiscal third quarter, the brand added $128 million to sales growth, and management lifted its full-year profit forecast, according to the company's investor call. Excluding Rhode, net sales rose 2 percent year over year, with softer trends in the UK and Germany, e.l.f.'s largest international markets. Higher tariff costs weighed on gross margin, which declined 30 basis points to 71 percent, though pricing and mix partly offset the drag.

Management now expects net sales growth of 22 to 23 percent for the fiscal year, up from an earlier forecast of 18 to 20 percent, with Rhode contributing roughly $260 million to $265 million, according to the company's prior guidance. The namesake brand's softness has prompted plans for targeted price reductions, faster innovation, and expanded international marketing.

The guidance raise signals management expects demand to stay strong through the fiscal year. Investors will watch the earnings call for updated margin trends and the pace of Rhode's international rollout.

This article is for informational purposes only and does not constitute investment advice.