Elf Beauty projects annual forecasts below estimates as consumers spend cautiously

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By Granth Vanaik (Reuters) -Elf Beauty forecast annual sales and profit below estimates on Thursday and said it would raise prices of its products in case tariffs on imports from China are increased, if Republican presidential candidate Donald Trump comes to power. Shares of the company were down about 5% in extended trading even as Elf topped first-quarter estimates. While Elf has somewhat been able to maintain its post-pandemic boom in demand by attracting customers for its affordable skincare and cosmetic products, the downbeat forecasts indicate that budget-strained customers were spending cautiously. The company was seeing consumers get "choosier" but they were opting for Elf, CEO Tarang Amin told Reuters. In recent months, investor concerns have also grown around the possibility of rising tariffs on imports of Elf's nearly 80% finished products manufactured in China and higher ocean freight costs, among other factors. An increase in tariffs on imports from China, if Republican presidential candidate Donald Trump comes to power, would mostly impact the company in fiscal 2026, Amin said. Earlier this year, Trump had floated the idea of imposing tariffs on China again if he wins the presidential election in November and said the rate for such tariffs could exceed 60%. "We don't like 60% tariff just because we feel it is a tax on American consumers," Amin said, adding that the tariffs impact would be addressed by raising product prices and diversifying supply chain operations. Elf now sees 2025 sales to be between $1.28 billion and $1.30 billion, compared to previous expectations of $1.23 billion and $1.25 billion. Analysts expected annual sales of $1.30 billion, according to LSEG data. It now expects annual adjusted per-share profit to be between $3.36 and $3.41, versus prior projections of $3.20 and $3.25. Analysts expected profit for FY25 to be $3.42 per share. Net sales rose 50% to $324.5 million in the quarter ended June 30, beating estimates of about $304.7 million. Adjusted profit of $1.10 per share also topped LSEG expectations of 84 cents. (Reporting by Granth Vanaik in Bengaluru; Editing by Mohammed Safi Shamsi)