Elf Beauty raises annual forecasts for robust cosmetics demand, shares rise

By Anuja Bharat Mistry

(Reuters) – Elf Beauty raised its annual sales and profit forecasts on Wednesday, betting on its efforts to sell cosmetics such as lip oil and liquid blush at affordable prices in the U.S. and abroad, sending the company's shares up 9 in extended trading % increased trading.

Customers looking for cheaper makeup and skin care products have helped boost Elf's sales in a tough market where major beauty brands like Estee Lauder and L'Oreal are struggling to drive demand.

Elf expects net sales to be in the range of $1.32 billion to $1.34 billion, compared to its previous forecast of $1.28 billion to $1.30 billion.

The company's strategy of introducing “duplicates” of luxury cosmetics and keeping prices for its products between $2 and $10 has further fueled demand.

The California-based company has expanded its product offerings to mass retailers such as Walmart, Target and Amazon.com, reaching a broader customer base across the United States.

Eleven is expanding into a subset of Dollar General stores in November, CEO Tarang Amin said in a post-earnings conference call, adding that it helps tap into a consumer base that only has access to some legacy mass-market brands.

Net sales rose 40% to $301.1 million in the quarter ended Sept. 30, compared with analysts' average estimate of $285.8 million, according to data compiled by LSEG.

On an adjusted basis, the company reported profit of 77 cents per share, beating analysts' estimates of 43 cents per share.

The company expects full-year adjusted earnings per share to be between $3.47 and $3.53, up from the previous range of $3.36 to $3.41.

Price increases in international markets such as India and Germany, as well as cost-saving measures, helped Elf increase its gross margin by 40 basis points to 71% in the second quarter.

Elf has broad appeal across all income groups, Amin told Reuters, adding that the company's “strategy is to provide the highest quality at an affordable price or at an exceptional price.”

(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shailesh Kuber)