ELF Raises Fiscal 2027 Outlook as Rhode and Global Growth Accelerate

ELF's First-Quarter Results Reset Expectations

Fiscal first-quarter net sales rose 36% to $479.4 million, topping the Zacks Consensus Estimate of $427 million. Adjusted earnings reached $1.75 per share versus the consensus estimate of 71 cents.

The quarter marked ELF’s 30th consecutive quarter of net sales growth. U.S. net sales increased 29%, while international net sales advanced 61%, giving the raised outlook support from multiple markets.

Rhode Delivers an Outsized Boost for ELF

Rhode contributed about $160 million of first-quarter net sales, exceeding management’s expectations. Management now expects Rhode to add about 13 percentage points to fiscal 2027 net sales growth before the acquisition annualizes in August, up from 9 points previously.

Demand also showed repeat-purchase strength. Rhode’s summer launch generated $27 million of direct-to-consumer sales in one day, with more than 70% coming from existing consumers while 90,000 new consumers were added.

ELF Lifts Its Fiscal 2027 Sales and EPS Outlook

Management now expects fiscal 2027 net sales of $1.938-$1.968 billion, implying 18%-20% growth. The prior forecast called for $1.835-$1.865 billion and 12%-14% growth.

Adjusted earnings guidance increased to $3.50-$3.55 per share from $3.27-$3.32. For the second quarter, management expects total net sales growth in the mid-30% range, supported partly by improving e.l.f. trends and Rhode’s European launch pipeline.

Tariff Refunds Give ELF Reinvestment Flexibility

First-quarter gross margin increased about 1,400 basis points to 83%. Approximately 1,050 basis points of that improvement came from roughly $50 million of IEEPA tariff refunds.

Management plans to reinvest the $50 million during the rest of fiscal 2027 through lower prices on selected products and higher marketing investment. The refunds are expected to have a net zero impact on full-year adjusted EBITDA because the benefit is being spent back into the business.

Global Rollouts Extend ELF's Post-Earnings Runway

Rhode is scheduled to launch with Sephora across 19 European countries in September. ELF also plans to expand e.l.f. with Sephora in Brazil and Naturium with Sephora in Canada and Mexico, broadening the geographic base behind the raised outlook.

Beauty demand remains active across major peers. Ulta Beauty, Inc. ULTA reported 11.1% net sales growth and 5.3% comparable sales growth in its fiscal first quarter. The Estee Lauder Companies Inc. EL reported 2% organic sales growth in its fiscal third quarter and raised its fiscal 2026 organic sales outlook to about 3%.

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ELF's Growth Signals Back the Earnings Momentum

The bottom line is that ELF enters the balance of fiscal 2027 with higher expectations supported by Rhode, international growth and a stronger companywide forecast. Reinvestment and the need to sustain organic improvement keep execution central to the outlook.

ELF currently carries a Zacks Rank #1 (Strong Buy) and a Growth Score of A. The favorable Growth Score complements the top Zacks Rank by highlighting growth characteristics and financial strength that can matter to near-term stock selection. You can see the complete list of today’s Zacks #1 Rank stocks here.

The broader Style Score picture is mixed. ELF has a VGM Score of C, Value Score of F and Momentum Score of D, suggesting that growth characteristics are more favorable than its value and momentum profiles. Those readings provide a counterweight as investors assess the durability of the post-earnings improvement.

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This article originally published on Zacks Investment Research (zacks.com).

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