E.l.f. Beauty reported that a $50 million windfall in federal tariff refunds significantly boosted its profitability during the three-month period ended June 30. The refunds, along with related interest payments from duties struck down by the Supreme Court, contributed to a doubling of net income and a 14 percentage point increase in gross margin compared to the same period a year earlier.
The cosmetics company’s net income for the quarter reached $66.6 million, or $1.12 per share, compared with $33.3 million, or 58 cents per share, in the prior year. Adjusted earnings per share came in at $1.75. Quarterly sales climbed to $479.4 million, representing approximately 36% growth from $353.7 million a year earlier. The company noted it remains in line to receive approximately $8 million in additional refunds.
Management indicated that the tariff refund represented a one-time benefit and that underlying margin expansion of about 3.5 percentage points would have occurred regardless, driven primarily by prior-year price increases and reduced tariff costs. Chief Executive Tarang Amin stated the company intended to reinvest the refund proceeds into pricing improvements and marketing initiatives across its brand portfolio.
E.l.f. raised its full-year revenue guidance to between $1.94 billion and $1.97 billion, exceeding prior expectations of $1.86 billion and surpassing its previous range of $1.84 billion to $1.87 billion. The company also lifted its adjusted earnings per share outlook to between $3.50 and $3.55, beating the $3.33 consensus estimate and exceeding its prior guidance of $3.27 to $3.32.
The company had previously implemented price increases tied to tariff concerns and conducted a broad pricing study covering 80% of its product assortment. Testing showed that price reductions on approximately 90% of items produced minimal impact on unit sales, while roughly 10% of products demonstrated potential for volume gains through lower pricing. Specific examples included the Power Grip Primer, which showed limited response to price cuts, and the Cream Glide Lip Liner, which experienced increased sales when reduced from $3 to $2.
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