E.l.f. Beauty CEO: January Sales Slump Due to Holiday Hangover and Social Media Slowdown

E.l.f. Beauty, the popular cosmetics company known for its affordable and high-quality products, reported a 36% drop in profits and softer-than-expected sales trends in January. CEO Tarang Amin attributed these challenges to a hangover from holiday discounting and a slowdown in social commentary, particularly on TikTok, due to uncertainty around the platform's fate.

In an interview with CNBC, Amin explained that the category slowed down due in part to these factors. "One [factor] is, [with] the LA wildfires, people I think didn't want to be tone deaf with posting a lot of things while that devastation went on. The second is, there was a lot of uncertainty around TikTok. I feel like the only things people were posting on TikTok was whether it was going to stay open or shut down."



The company's holiday sales were higher than expected, but profits narrowly missed estimates. E.l.f. Beauty cut its full-year guidance after seeing a 36% drop in profits and "softer than expected" sales trends in January, marking a rare downturn for one of beauty's hottest brands. Shares of E.l.f. fell more than 20% in extended trading Thursday.

Amin also weighed in on new tariffs against China and how the company is preparing. About 80% of its supply chain is in the region. Amin said it is too early to say whether E.l.f. will raise prices to offset the effect to profits, but the new 10% duties are better than what the company was bracing for.

E.l.f. Beauty's shares tumbled over 20 percent in extended trading on Thursday, after the cosmetics company cut its annual net sales and profit forecasts, citing weak demand in the mass beauty category at the start of the year. The company now expects annual net sales of $1.3 billion to $1.31 billion, down from a previous target of $1.315 billion to $1.335 billion. Adjusted net income is now forecast at a range of $193 to $196 million, down from prior estimate of $205 million to $208 million.

In an interview with WWD, Amin elaborated on that softer start to 2025, saying that there were three factors at play. "First, the category continued to be soft. The category in the mass side was down 5%," he said. "Second, we're lapping that massive viral launch we did last year of our lip oils. We could hardly keep them in stock. Then third, a couple of our new products this year are off to a little bit of a slower start. Now we are still in early days. The marketing activations haven't completely started. We have resets coming, including space expansion at Target and Walgreens, but we always stay cautious until we see a change in trend."

As E.l.f. Beauty navigates these challenges, investors should closely monitor the company's progress and its ability to adapt to changing market conditions. While the recent sales slump is concerning, the company's long-term growth prospects remain strong, supported by its innovative product offerings, digital marketing strategies, and commitment to affordability.