E.l.f. Beauty Stock Plunges 30% as Tariff Storm Decimates Profits

Makeup giant gets an ugly reality check as trade wars wipe out nearly a third of market value overnight.

The Tariff Takedown

E.l.f. Beauty just got a brutal makeover from global trade policies. The cosmetics company saw its stock crater by nearly 30%—one of those moments where Wall Street analysts suddenly remember that international supply chains actually matter.

Profit margins got squeezed harder than a stubborn foundation tube. Import costs skyrocketed while consumer pricing power evaporated faster than setting spray in summer heat.

The Beauty Sector Bloodbath

Competitors are watching closely—this isn't just an E.l.f. problem. The entire cosmetics industry relies on global manufacturing, and tariff dominoes don't discriminate between drugstore brands and luxury lines.

Supply chain disruptions hit beauty harder than most sectors. Those perfectly curated ingredient lists? Suddenly costing 30% more to import. Those sleek packaging designs? Stuck in customs while expiration dates tick down.

Traditional finance never quite grasps how quickly retail sentiment shifts—one day you're trending on TikTok, the next you're explaining tariff impacts to shareholders who thought 'supply chain' was a yoga term.

When global trade wars clash with vanity economics, even the prettiest balance sheets can turn ugly fast.

TLDR

• E.l.f. Beauty stock dropped 29% after issuing fiscal year guidance below Wall Street expectations, with revenue forecast at $1.55-$1.57 billion versus the expected $1.65 billion.
• The company expects over $50 million in annual costs from tariffs, with China accounting for 75% of its production, causing gross margins to fall 165 basis points to 69%.
• Rhode, acquired for $1 billion, is expected to add $200 million in sales this fiscal year and $300 million on an annual run rate basis, representing about 13% of total revenue.
• Second quarter revenue came in at $344 million versus expectations of $366 million, though adjusted earnings of 68 cents per share beat estimates of 57 cents.
• Net income plunged 84% to $3 million as the company absorbed tariff costs before August price increases took effect, with profitability expected to improve in the second half.

E.l.f. Beauty shares tumbled 29% Wednesday after the cosmetics company issued fiscal year guidance that fell well short of Wall Street expectations. The company forecast revenue between $1.55 billion and $1.57 billion for the full year.

e.l.f. Beauty, Inc., ELF

Analysts had expected $1.65 billion in revenue. The company also projected adjusted earnings per share of $2.80 to $2.85, far below the $3.58 consensus estimate.

This marks the first time E.l.f. has provided full-year guidance since pulling it in May. CEO Tarang Amin blamed the miss partly on the lack of guidance last quarter, which he said impacted consensus estimates.

$ELF (e.l.f. Beauty) #earnings are out: pic.twitter.com/11c3272ElR

— The Earnings Correspondent (@earnings_guy) November 5, 2025

For the fiscal second quarter ended September 30, E.l.f. reported revenue of $344 million. This represented 14% growth from $301 million a year earlier but missed expectations of $366 million.

The company did beat earnings expectations. Adjusted earnings came in at 68 cents per share versus the expected 57 cents.

Tariff Costs Hammer Profitability

The company expects more than $50 million in annual costs from tariffs in fiscal 2026. China accounts for about 75% of E.l.f.’s global production.

Gross margins fell 165 basis points to 69% in the quarter. Net income dropped 84% to just $3 million, down from $19 million a year earlier.

Amin said the second quarter saw the biggest tariff impact. The company raised prices by $1 in August, but those increases weren’t reflected in the quarter’s results.

“You’re seeing tariff impact without pricing in this quarter,” Amin explained. He added that gross margins should improve sequentially in the second half of the year as pricing takes effect.

The company has no plans for additional price increases. It’s working to streamline its supply chain and diversify operations to reduce tariff exposure.

Rhode Acquisition Becomes Critical Growth Driver

Rhode, Hailey Bieber’s cosmetics line acquired earlier this year for $1 billion, has become essential to E.l.f.’s growth story. The brand is expected to contribute $200 million in sales this fiscal year.

On an annual run rate basis, Rhode should add $300 million. That means Rhode represents about 13% of E.l.f.’s total revenue forecast.

The acquisition highlights how much E.l.f. needs Rhode to maintain growth. Without it, the company’s revenue potential WOULD have been considerably slimmer as its namesake brand growth moderates.

Rhode launched in Sephora stores nationwide in September. Amin called it the biggest brand launch in Sephora’s North American history.

“It was two and a half times bigger than the number two,” Amin said. The brand is currently growing about 40% year over year.

From a marketing perspective, E.l.f. faced tough comparisons to last year’s massive launches. “We had some massive launches last year,” Amin told Reuters.

Last year’s lip oils gained social media traction in early 2024. This helped push E.l.f. shares to record highs.

“We feel great about our innovation this year, but it’s not as big as the lip oils were last year,” Amin added. The company is working on major product launches for its namesake brand.

Rhode is launching in the UK soon. Amin sees potential for global expansion well beyond current levels.