Hailey Bieber's Rhode brand was a huge win for Elf Beauty. Why the stock is losing a fifth of its value anyway.

By Claudia Assis

Elf Beauty products at a Target store in New York City earlier this year. The company's stock dropped more than 20% in the extended session Wednesday after reporting earnings.

Elf Beauty Inc. late Wednesday touted a "record-breaking" launch of its Rhode brand at Sephora stores in North America and market-share wins, but that wasn't nearly enough for the stock.

Citing Rhode's success at the Sephora stores and market-share gains for the Elf brand, Chief Executive Tarang Amin said that the company remained "confident in our strategy to grow market share and capitalize on the significant whitespace ahead of us."

That confidence, however, didn't extend to Wall Street, which zeroed in on a double whammy of Wednesday's lower-than-expected quarterly earnings and weaker outlook for the fiscal year.

Elf's stock (ELF) lost more than a fifth of its value in the extended session, down 21.2%, after ending the regular trading day essentially flat.

The company had passed on giving investors a fiscal 2026 outlook the last time it reported earnings, in August, citing concerns about tariffs. This time, it called for sales between $1.55 billion and $1.57 billion, and earnings between $2.80 a share and $2.85 a share for the fiscal year.

That is lower than expectations of earnings of $3.53 a share on sales of $1.65 billion, according to analysts polled by FactSet.

Rhode, the beauty brand founded by model and businesswoman Hailey Bieber, who is married to singer Justin Bieber, launched at Sephora stores in North America in September after Elf bought it earlier in the year.

Besides the outlook for the fiscal year, Elf's fiscal second-quarter earnings also disappointed. The company reported adjusted earnings of 68 cents a share on sales of $343.9 million, which is up 14% from the year-ago quarter.

That was mostly thanks to growth in both retail and e-commerce channels, in the U.S. and internationally, the company said.

Wall Street was looking for adjusted earnings of $1.02 a share on sales of $473 million.

-Claudia Assis

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11-05-25 2030ET