e.l.f. Beauty Posts 30th Consecutive Growth Quarter as Rhode Drives 36% Sales Surge
International expansion and the Rhode brand fuel top-line momentum, but investors face skepticism over short interest and the sustainability of margin improvements without regulatory windfalls.
e.l.f. Beauty reported first-quarter fiscal 2027 results on August 5, recording a 36% year-over-year increase in net sales. This performance marks the company’s 30th consecutive quarter of growth, a streak spanning more than seven years. Management noted that only six of 516 public consumer companies tracked have matched this pace while maintaining at least 20% quarterly growth. On the back of these results, e.l.f. raised its full-year net sales growth outlook to 18-20%, up from the previous guidance of 12-14%.
The company’s international segment emerged as a primary growth engine, with sales surging 61% compared to a 29% increase in domestic markets. This expansion was driven by new retail partnerships, including Boots in the UK, Sephora in Brazil, and Naturium in Canada and Mexico. The Rhode brand, led by Hailey Bieber, contributed approximately $160 million in net sales this quarter. Rhode also posted $27 million in single-day sales on its website during its summer launch, attracting 90,000 new customers while retaining over 70% repeat buyers.
Despite the headline growth, the core e.l.f. business faced challenges. Organic net sales for the main brand declined by a high single-digit percentage, with unit volumes falling by approximately 3 percentage points. Management acknowledged the need to adjust its value positioning, having cut prices on about 10% of e.l.f. SKUs in the spring to win back volume. The company is also expanding into haircare, with its June launch drawing nearly half of its buyers from outside the existing customer base.
Profitability metrics were significantly influenced by non-recurring items. Gross margin improved to 83%, a rise of roughly 1,400 basis points, largely due to a one-off $50 million refund from IEEPA tariffs. Adjusted EBITDA rose 93% to $168 million, but excluding the tariff refund, growth was 36%. Management plans to reinvest the entire tariff refund through lower prices and marketing, expecting a net zero benefit to full-year EBITDA. Selling, general and administrative expenses as a share of sales increased to 54% from 50% a year earlier.
Market sentiment remains divided. Hedge fund ownership increased modestly from 38 to 39 funds, while short interest stands at 16.01% of the float, indicating organized skepticism. Shares trade at a forward price-to-earnings ratio of 33 as of August 13. The company also faces upcoming financial obligations, including the first payment on Rhode’s earnout later this year due to the brand’s outperformance.
