E.L.F. Beauty reports growth in Q4 but rethinks pricing strategy
Key takeaways
- E.L.F. Beauty reported 35% quarterly sales growth, driven partly by its Rhode and Naturium brands.
- The company is lowering prices on selected products after earlier price increases hurt unit sales.
- It expects continued growth in fiscal 2027 despite rising costs and higher debt levels.
E.L.F. Beauty reported net sales and market share gains in its Q4 fiscal 2026 results, marking its seventh consecutive year of growth. However, the sales growth was partly offset by weaker unit performance at the core E.L.F. brand, prompting a shift in the company’s pricing strategy.
The company reports show net sales increases of 35%, amounting to US$449.3 million. The company says all five of its brands delivered growth during the year, and highlights Rhode and Natrium as key contributors.
Annual net sales rose 25% year-on-year to US$1.64 billion, which the company attributes to growth across its retail and e-commerce channels — both in the US and in international markets.
Moreover, its gross margin improved by 140 basis points to 73%, which E.L.F. says was mainly driven by pricing benefits, although higher tariffs partially offset the gains.
During the earnings call, the company’s CEO, Tarang Amin, said that the US$1 price increase E.L.F. introduced last year in response to tariffs and inflation helped it to raise its dollar sales, but led to a decline in units sold.
“As everyone’s seen, our dollars increased with that, but our units fell off,” he said.
In response, E.L.F. has started lowering prices on selected products to boost sales volumes. So far, the company has reduced the price of its Halo Glow Skin Tint from US$18 to US$14.
CEO Amin said during the call that the shift resulted in a roughly 40% sales lift, and he announced that the company is now exploring additional pricing adjustments across its other product lines to imitate the successful move.
Beyond pricing, the company’s profitability also came under pressure, as its operating costs increased sharply and selling, general, and administrative expenses rose by US$126.4 million to US$319.1 million. E.L.F. says it faced higher costs for marketing, merchandising, distribution, employee compensation, and regulatory-related activity.
Looking ahead
E.L.F. ended fiscal 2026 with US$289.7 million in cash and cash equivalents, up from US$148.7 million a year earlier. Meanwhile, the company’s total debt increased to US$841.7 million, compared to US$256.7 million at the end of fiscal 2025.
The company expects continued growth through fiscal 2027, and projects net sales between US$1.84 billion and US$1.87 billion, or 12% to 14% growth.
