E.l.f. Beauty Inc. saw double-digit ecommerce growth in its fiscal Q1, more than twice the rate of its overall sales, as the budget beauty brand moved to raise prices for the third time in its 21-year history.
The $1 price hike, which took effect Aug. 1, is part of efforts to offset rising costs from U.S. tariffs on goods it imports from China, executives said.
E.l.f. Beauty, which also owns the e.l.f. Cosmetics, e.l.f. SKIN, Keys Soulcare, Well People, Naturium and Rhode brands, ranks No. 662 in the Top 2000. The database is Digital Commerce 360’s ranking of North America’s leading online retailers by annual web sales. Digital Commerce 360 projects the company’s online sales will reach $100.84 million in 2025.
e.l.f. Beauty web sales by year
Ecommerce helps e.l.f. Beauty net sales in Q1
In its latest earnings report, e.l.f. said net sales for the quarter ended June 30 rose 9% year over year to $353.74 million. The increase was fueled by gains in both retailer and ecommerce channels in the U.S. and abroad. That pace compares with a 50% gain in the year-ago period, marking the second consecutive quarter of single-digit increases after several years of high double-digit growth.
Ecommerce revenue grew close to 20% in the quarter and now represents about one-fifth of the business, chief financial officer Mandy Fields said on the earnings call. She noted the rate was “fairly consistent with what we’ve seen over the last several quarters.”
At the same time, gross margin fell 215 basis points to 69% from a year earlier, primarily due to incremental tariff costs, Fields said. To help offset those expenses, e.l.f. applied the $1 increase across its entire product assortment.
“Overall, retailer acceptance has been good for our price increases,” CEO Tarang Amin told analysts. “We’ve only taken three increases in our 21-year history and have had a really good track record in terms of how that’s executed.”
Amin noted that even after the price change, 75% of e.l.f.’s products remain priced under $10.
Tariffs remain a wild card for e.l.f.
Tariffs are a source of uncertainty for e.l.f. Beauty, which sources about 75% of its global production from China, Fields said. Because of the uncertainty, she said the company is holding off on issuing a full-year fiscal 2026 outlook until trade conditions become clearer.
For now, U.S. imports from China face a combined tariff rate of 55%, Fields said, a sharp drop from the 170% rate in place for part of the spring. However, that figure could change again soon. Talks are underway ahead of an Aug. 12 deadline, when U.S. tariffs on Chinese goods could surge to about 145% if no trade agreement is reached.
If the current 30% tariff were to remain in place, Fields estimated the annualized gross impact on cost of goods sold could be about $50 million. To help blunt that effect, she said the company is pursuing a three-pronged plan:
- Pricing adjustments
- Supply chain optimization
- Business diversification
Looking ahead, e.l.f. expects sales growth in the first half of the fiscal year to outpace the 9% it posted in Q1. The company expects to be helped in part by the contribution of newly acquired skin care brand Rhode.
Rhode acquisition set to accelerate growth
On Aug. 5, the company closed its $800 million purchase of HRBeauty LLC, the parent company of Rhode, a fast-growing lifestyle beauty brand founded by Hailey Bieber. The deal included $600 million in cash funded through a new term loan and $200 million in stock, with the potential for up to $200 million in additional earnout payments over the next three years, according to the company.
Rhode launched about three years ago. It generated $212 million in direct-to-consumer (DTC) net sales in the 12 months ended March 31, with just 10 products, Amin told analysts. He described it as a “breakthrough” brand that pairs high-quality innovation with a highly engaged community.
E.l.f.’s initial focus will be on expanding Rhode’s brand awareness. Awareness currently stands at 20% in the U.S., about half the average for other premium skin care brands, Amin said. Additionally, e.l.f. will work on broadening Rhode’s distribution. A key part of that plan is a major rollout with Sephora, where Rhode will debut in all U.S. and Canadian stores in September, followed by the U.K. by year-end, he said. Amin noted that the launch skips Sephora’s usual “test market” approach.
The move builds on e.l.f.’s existing partnership with Sephora, which began with a Mexico launch last year, Amin said, and comes as the company prepares to enter Sephora Middle East in the coming year.
Other key numbers
In fiscal Q1, e.l.f. reported its 26th consecutive quarter of net sales growth and market share gains. Fields said digital sales remain strong, led by continued gains in the Amazon channel, which now ranks among e.l.f.’s largest customers.
International net sales climbed 30% year over year, fueled by gains in existing markets and new country launches, Amin said. By comparison, U.S. net sales rose 5% in the quarter.
International now accounts for 20% of e.l.f.’s sales, up from 10% six years ago, he said.
“As we look to new international markets, we’ve seen success with our engagement model across social platforms, driving consumer demand well before we enter a country,” Amin told analysts.
In product categories, Amin said e.l.f. delivered triple-digit share gains across face, lip and eye makeup in Q1, more than doubling its share in each segment over the past five years.
Retail partnerships continue to play a central role. At Target, e.l.f.’s longest-standing national retail customer, the brand holds a 21% cosmetics share, up 190 basis points in Q1, Amin said. He noted that the company is replicating that success with other key retailers. It posted triple-digit share gains with all major tracked channel partners in Q1.
The brand is also expanding in newer channels, such as Dollar General.
“Their partnership has been a win-win,” Amin said, noting that 60% of e.l.f. purchases at Dollar General come from shoppers who had never bought cosmetics there before, and 53% are new to the e.l.f. brand. He said the retailer plans to expand to more Dollar General locations this fall.
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