E.l.f. Beauty is set to walk back some of its fuelled price increases, after the retailer saw a slide in demand that ramped up in recent months as consumers contend with higher gas prices.
“Whenever you take a price increase that’s that big, you’re going to see unit degradation, but I would say we’ve seen units drop off a bit more in the last few months as consumers have particularly been suffering with higher costs,” CEO Tarang Amin told CNBC in an interview.
“So it’s one of the reasons why we want to reinforce the value proposition we have.”
Amin said the company tested a US$4 price reduction on its $18 Halo Glow skin tint, which led to a nearly 40% lift in the business. He said this signals how sensitive consumers are to pricing right now.
In response, E.l.f plans to test additional price reductions on certain products to see if that will drive unit growth, after it raised prices by $1 across its entire E.l.f assortment last August.
“There’ll be additional items that we will test lower pricing on to really be able to reinforce our value proposition at a time when the consumer is suffering,” Amin said.
This comes as the company announced its fourth-quarter earnings, which beat Wall Street’s expectations.
Revenue rose 35% year-over-year to $449 million and beat expectations of $423 million.
Its gross margin also grew by 140 basis points to 73%, primarily driven by pricing benefits and partially offset by higher tariffs.
Amin said fiscal 2026 also marked the company’s seventh consecutive year of net sales and market share growth.
“All five of our brands grew this year, with Rhode and Naturium delivering particularly strong results and reinforcing the power of our expanding brand portfolio,” he said.
“The whitespace opportunity in front of us across brands, categories, and geographies gives us great confidence in the runway ahead.”
However, in the months ending March 31, E.l.f. posted a loss of $49.9 million, or 82 cents per share, compared with income of $28.3 million, or 49 cents per share, a year earlier.
This was primarily driven by a $57.6 million cost associated with its acquisition of Rhode. Excluding that charge and other one-off expenses, the company reported net income of $19.4 million or 32 cents per share.
For fiscal 2027, the company expects a 12% to 14% increase in net sales.
At the time of writing, E.l.f Beauty (NYSE: ELF) shares fell 4.27% to $50.72 but rose 3.51% in after-market trading to $52.50. Its market cap is $3 billion.
