E.l.f. Beauty tariff refunds lift first-quarter profit as sales climb
E.l.f. Beauty received about $50 million in tariff refunds, lifting quarterly profit, then raised its full-year sales and earnings outlook.
By Theo Nakamura · Staff Writer
· 3 min read
E.l.f. Beauty tariff refunds added about $50 million to the cosmetics company’s fiscal first-quarter results, helping reported net income nearly double while sales rose 36%. For investors, the key detail is that the refund drove most of the unusually sharp profit increase, and the company says that benefit will not repeat.
For the three months ended June 30, E.l.f. reported net income of $66.6 million, or $1.12 a share, compared with $33.3 million, or 58 cents a share, a year earlier, CNBC reported. Revenue reached $479.4 million, up from $353.7 million in the prior-year period.
Adjusted earnings, which exclude specified nonrecurring items, were $1.75 a share. That topped the 71-cent analyst estimate compiled by LSEG, while revenue exceeded the $430 million consensus estimate, according to CNBC.
How did E.l.f. Beauty tariff refunds affect its earnings?
A tariff is a tax charged on imported goods. E.l.f. said it received roughly $50 million in refunds, plus some related interest, during the June quarter for duties that earlier reporting said were invalidated by the Supreme Court. CNBC reported that the money increased gross margin, the share of sales left after product costs, by 14 percentage points from a year earlier.
The company was still awaiting about $8 million more in refunds, CNBC said. That outcome follows earlier reports in May that E.l.f. expected refunds of about $55 million to $58.5 million but had not included them in its fiscal 2027 outlook. Reuters reported then that the company had paid about $58.5 million in tariffs and was seeking repayment.
E.l.f. told CNBC the refund was the main reason for the quarter’s outsized profit effect. Without it, gross margin still would have increased by about 3.5 percentage points, primarily because of earlier price increases and lower tariffs, according to CEO Tarang Amin.
Where will E.l.f. spend the refund?
Amin told CNBC that E.l.f. plans to put the proceeds into marketing and lower prices on selected products. The company had previously raised prices amid higher tariffs, including a $1 increase across its E.l.f. assortment, CNBC reported in May.
The company tested lower prices across 80% of its assortment. CNBC reported that reduced prices did not change unit sales for about 90% of the products tested, while roughly 10% appeared able to gain volume from a cut. E.l.f. plans to focus its reductions on that smaller group.
- Power Grip Primer saw little change in volume after a price reduction, CNBC reported.
- Demand changed when E.l.f. lowered the Cream Glide Lip Liner price to $2 from $3, according to CNBC.
E.l.f. also lifted its fiscal-year forecast. The company now expects revenue of $1.94 billion to $1.97 billion and adjusted earnings of $3.50 to $3.55 a share, CNBC reported. Those are company projections, not results, and the temporary refund should be separated from the underlying sales growth when assessing the updated outlook.
This story draws on original reporting from CNBC.
