e.l.f. Beauty, Inc. (NYSE:ELF) jumped 14% after profit came in nearly twice as high as expected and the company raised its outlook.
For fiscal 2024, ELF expects net sales of $792M to $802M up from a previous estimate of $705M to $720M. For the fiscal first quarter, ELF reported GAAP EPS of $0.93 that beat the average analyst estimate by $0.45, while revenue of $216.3M beat by $31.77M.
Net sales increased 76% to $216.3M and gross margin 280 basis points to 71%, primarily driven by favorable FX impacts, margin accretive mix and cost savings.
“We are off to a terrific start in our new fiscal year with net sales growth of 76% and market share gains of 260 basis points in Q1. This marks our 18th consecutive quarter of delivering both net sales growth and market share gains,” Chief Executive Officer Tarang Amin said in a statement.
“We are in the early innings of unlocking the full potential we see for e.l.f. Beauty and are raising our fiscal 2024 outlook to reflect our continued momentum.”
The results come on the heels of reports that consumer spending has been resilient amid inflation that, while slowing, continues to trend above the Federal Reserve’s target of 2%.
The “major” guidance raise still appears conservative to Oppenheimer, the firm wrote in a note.
“We have continued to under-estimate the recent sales boom and market share gains,” Oppenheimer said. “The ELF management team continues to execute at a very high level.”
The firm looks “favorably” upon the beauty purveyor’s long-term prospects and the ability of management to deliver on its financial algorithm, but valuation “keeps us sidelined here.”
Oppenheimer has a Perform rating on the stock. We remain impressed with management’s strong execution in recent years and the market share the company has already gained.
The return of student loan payments
Americans with student loans will have to start repaying them in October after a three-year Covid hiatus. Management addressed the situation on the earnings call.
“We’re keeping an eye on the consumer environment and the overall macroeconomic environment,” CEO Amin said. “We’re very well positioned of that superior value equation. Our average unit retails and color cosmetics are a little bit over $6 compared to $9 for legacy brands and almost over $20 for prestige.”
“We feel that sets us up well particularly given as we’ve continued to take our quality ratings up year after year after year. We feel really good about that, but we’ll be paying close attention.”
Amin also noted that the company is “quite bullish” on international prospects with a number of new countries being identified for entry.
“I’d say our first focus would be Western Europe,” Amin said.
ELF is up 244% over the past 12 months, and up 143% in 2023.