e.l.f. Beauty (NYSE:ELF) exceeded Wall Street expectations for its fourth-quarter performance on Wednesday but issued softer annual guidance, highlighting the growing impact of higher oil prices linked to the conflict involving Iran.
The cosmetics company said the ongoing war could create a financial headwind of between US$15 million and US$20 million during fiscal 2027.
Despite the cautious outlook, shares in Elf Beauty surged around 10% in premarket trading on Thursday after the group posted quarterly results ahead of analyst forecasts.
The company joins a growing list of international businesses affected by the conflict involving the United States, Israel and Iran, although management said the expected financial impact has not yet been included in its current guidance.
Chief financial officer Mandy Fields said ongoing cost-reduction initiatives could help offset part of the pressure created by the conflict. She also noted that potential tariff refunds may further reduce the financial burden.
Elf Beauty, which relies on China for approximately 75% of its manufacturing output, has also been dealing with the effects of import tariffs introduced by President Donald Trump and later overturned by the U.S. Supreme Court.
Fields said the company paid around US$58.5 million in tariffs and is currently working to recover those amounts through refunds.
The company expects full-year net sales of between US$1.84 billion and US$1.87 billion, with the midpoint slightly below the analyst consensus estimate of US$1.87 billion, according to LSEG data.
Annual adjusted earnings are projected at US$3.27 to US$3.32 per share, also below analyst expectations of US$3.61 per share.
Elf, which prices roughly 75% of its products at US$10 or less, has continued to attract demand from price-sensitive consumers despite ongoing economic uncertainty.
“All five of our brands grew this year, with rhode and Naturium delivering particularly strong results and reinforcing the power of our expanding brand portfolio. The whitespace opportunity in front of us across brands, categories, and geographies gives us great confidence in the runway ahead,” said Elf chief executive Tarang Amin.
Morgan Stanley analysts, however, expressed concerns over slowing momentum in the company’s core cosmetics business.
“the key point coming out of Q4 results/FY27 guidance is that base ELF cosmetics has slowed to LSD global consumption in the L12W, with guidance implying flat to slight growth for base ELF in FY27 based on our estimates,” the bank’s analysts said.
“We worry base ELF cosmetics share loss will linger, with concerning compressing base ELF $ share trends, and even more concerning unit share trends in the U.S.,” they added.
Elf — short for eyes, lips and face — reported a 35% increase in fourth-quarter revenue to US$449.3 million, comfortably ahead of analyst expectations of US$423.23 million.
Quarterly adjusted earnings reached 32 cents per share, exceeding consensus forecasts by US$0.03.