Cosmetics giant sees 30% profit drop as China duties weigh on bottom line, even as revenue and product innovation remain strong
E.l.f. Beauty (ELF) topped Wall Street expectations for both revenue and earnings in its fiscal first quarter, yet faced a sharp 30% drop in profits due to new tariffs on Chinese imports. The cosmetics company, which sources roughly 75% of its products from China, reported net income of $33.3 million — down from $47.6 million a year earlier.
While adjusted earnings per share came in at 89 cents, beating the expected 84 cents, and revenue rose 9% to $354 million, growth has notably slowed. This marks the second straight quarter of single-digit sales growth, a change from E.l.f.’s previous streak of high double-digit gains.
CEO Tarang Amin attributed the uncertainty to “a very volatile macro environment,” particularly due to tariff-related disruptions. The company has raised prices by $1 across its product line to cushion the impact and is now focusing on diversifying its supply chain and expanding globally.
Despite the slowdown, Amin highlighted that E.l.f. is still gaining market share and outperforming the beauty category overall. Recent product launches — like the Bright Icon Serum, priced at $17 and mimicking a $185 prestige product — continue to fuel consumer interest.
Looking ahead, E.l.f.’s recent acquisition of Hailey Bieber’s skincare brand, Rhode, is expected to boost growth, though its impact won’t be reflected until later in the year when it launches in Sephora stores across the U.S. and Canada.
With the beauty market cooling and consumer spending tightening, E.l.f. is navigating the challenges with innovation, pricing strategies, and global ambitions.
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