latest earnings are proof that it is more than just a pretty face. It delivered a beat-and-raise quarter, and its chief financial officer says the cosmetics maker expects double-digit growth each quarter this fiscal year.
Elf (ticker: ELF) said it earned an adjusted 39 cents a share in its fiscal first quarter as revenue climbed 26% to $122.6 million. Analysts were looking for earnings of 24 cents from revenue of $109.1 million.
Gross margins increased 3.9% to 68% as price increases and cost savings more than made up for higher transport expenses—a persistent problem across retail recently.
For the full year, the company now expects to earn an adjusted 84 cents to 87 cents a share from revenue of $448 million to $456 million. It had previously forecast earnings of 78 cents to 81 cents and revenue of $432 million to $440 million. Its top- and bottom-line forecasts are now ahead of the consensus calls among Wall Street analysts, which stand at 83 cents a share and revenue of $444.5 million.
Elf said it ended the quarter with $72.2 million in cash and cash equivalents and $89.7 million in long-term debt and finance lease obligations. That compares with $63.4 million in cash and cash equivalents and $95.3 million of long-term debt in the year-ago period.
Elf shares are up more than 2% since the start of the year, bucking the broader market’s slide. The S&P 500 was down about 13% before the close on Wednesday afternoon.
CFO Mandy Fields spoke with Barron’s about the report, saying elf’s “core value proposition” is resonating with consumers in the current inflationary environment. Even with the company’s recent price increases, she notes that elf products tend to cost around $5, versus closer to $9 for its mass market peers.
“Pricing is not something we take lightly,” Fields said, noting that elf has only raised prices three times in its history, in response to macro trends. Demand remains healthy despite the latest increase in May, a sign that customers remain willing to pay more, she said. The quarter that ended in June was elf’s 14th straight period of net sales growth.
Even as consumers buy more cosmetics—the core of elf’s business—they are also sticking with the skin-care routines they adopted during the pandemic, Fields said, so innovative skin care products have been quick to sell out. Elf’s skin care business grew 17% in the quarter, compared with 5% growth for the category.
As the company’s upbeat outlook demonstrates, Fields is confident about the rest of the year, especially given the resilience of the beauty category throughout economic cycles, she said. “In an environment like this, people are looking for things to feel better,” she said. “They can pick up a lipstick and it’s a little something that brightens your day.”
The stock had risen nearly 23% through Tuesday’s close since Barron’s recommended it in March 2021. That compares to a 3.8% gain for the S&P 500 over the same period.
Write to Teresa Rivas at [email protected]
Credit: www.marketwatch.com /