Raphael Stevens

E.l.f. Beauty cut its guidance after seeing soft sales trends in January and mixed holiday results.
CEO Tarang Amin told CNBC the category slowed due in part to a hangover from holiday discounting and changes in the way people were posting online amid the potential TikTok ban.
The cosmetics company reported holiday sales that were higher than expected but profits that narrowly missed estimates.

Elf complexion sponges arranged in Germantown, New York, on July 17, 2023.
Gabby Jones | Bloomberg | Getty Images

E.l.f. Beauty on Thursday cut its full-year guidance after seeing a 36% drop in profits and “softer than expected” sales trends in January, marking a rare downturn for one of beauty’s hottest brands. 
The cosmetics company reported holiday sales that were higher than expected but profits that narrowly missed estimates, another rare miss for the retailer. 

Shares of E.l.f. fell more than 20% in extended trading Thursday.
Here’s how E.l.f. did in its fiscal third quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Earnings per share: 74 cents adjusted vs. 75 cents expected
Revenue: $355 million vs. $330 million expected

The company’s reported net income for the three-month period that ended Dec. 31 was $17.3 million, or 30 cents per share, compared with $26.9 million, or 46 cents per share, a year earlier. Excluding one-time items, including stock-based compensation and expenses associated with its acquisition of Naturium, E.l.f. posted adjusted earnings of 74 cents per share. 
Sales rose to $355 million, up about 31% from $271 million a year earlier.
For the company’s full fiscal year, which only has one quarter remaining, E.l.f. issued guidance that came in below Wall Street expectations. The retailer is now expecting sales of between $1.3 billion and $1.31 billion, below estimates of $1.34 billion, according to StreetAccount. It had previously expected sales to be between $1.32 billion and $1.34 billion. 

E.l.f. is also now expecting adjusted earnings per share of between $3.27 and $3.32, far below StreetAccount estimates of $3.54. E.l.f. had previously expected full-year earnings of between $3.47 and $3.53. 
The company’s implied guidance for its current quarter looks even more rough. Based on its full-year outlook and actual figures from the first three quarters, E.l.f. could see earnings per share of between 66 cents and 71 cents during its current quarter, far below expectations of 97 cents, according to a CNBC analysis and estimates from LSEG. 
In an interview with CNBC, CEO Tarang Amin shrugged off concerns that there were larger issues at the company and instead pointed to an overall slowdown in the beauty category, tough prior-year comparisons and recent product launches that did not perform as well as previous new items. 
When it comes to the overall category, Amin said mass cosmetics declined 5% in January and the company suspects that was driven by two factors: a hangover from holiday discounting and a slowdown in “social commentary,” or fewer people talking about beauty online, which can drive cosmetics sales. 
“One, [with] the LA wildfires, people I think didn’t want to be tone deaf with posting a lot of things while that devastation went on. The second is, there was a lot of uncertainty around TikTok. I feel like the only things people were posting on TikTok was whether it was going to stay open or shut down,” said Amin. “Whatever the reason may be, that social commentary was way down.”
Amin also weighed in on new tariffs against China and how the company is preparing. About 80% of its supply chain is in the region.
Amin said it is too early to say whether E.l.f. will raise prices to offset the effect to profits, but the new 10% duties are better than what the company was bracing for.
Over the past couple of years, E.l.f. has been one of the fastest-growing brands in beauty, winning over shoppers young and old with its viral marketing, low prices and ability to offer high-quality, more-affordable “dupes” of prestige products.
While the brand is still growing and says it is still outpacing the overall category, that pace of growth is starting to slow down and recent product launches have not boosted sales in the same way they did in the past. 
Amin said the company prefers to take a “prudent” approach to guidance and still considers it a win that E.l.f. is outperforming the overall category.
He said the company is using the profits it generates to invest in improvements to inventory management programs, infrastructure and international expansion.

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Denver Broncos President Damani Leech said he viewed diversity as a “weapon” to get “the best talent in the room.”
Earlier this week, National Football League Commissioner Roger Goodell defended the NFL’s diversity-fostering hiring practices.
Leech spoke Thursday with CNBC Sport from Radio Row in New Orleans.

Denver Broncos President Damani Leech praised the National Football League’s commitment to diversity amid corporate and government efforts to reduce diversity, equity and inclusion hiring practices.
Leech is one of four African American presidents of NFL teams.

“I think we’ve all been hired in the last three to four years,” Leech told CNBC Sport from Radio Row in New Orleans ahead of Super Bowl 59. “So I think the progress that the league has made there is pretty tremendous.”

The Denver Broncos held a press conference to introduce team president Damani Leech in the team auditorium of UCHealth Training Center in Centennial, Colorado, on Aug. 29, 2022.
Rj Sangosti | MediaNews | The Denver Post | Getty Images

Earlier this week, NFL Commissioner Roger Goodell backed the league’s inclusive hiring practices, such as the Rooney Rule, a policy instituted in 2003 that requires teams to interview minority candidates for certain coaching and executive positions.
“I think we’ve proven to ourselves that it does make the NFL better,” Goodell said this week. “We’re not in this because it’s a trend to get into it or a trend to get out of it. Our efforts are fundamental in trying to attract the best possible talent into the National Football League both on and off the field.”
Leech echoed the commissioner’s viewpoints. He joined the Broncos after spending three years as chief operating officer of NFL International from 2019 to 2022.
“I view diversity as a weapon,” said Leech. “I think you’re trying to get the best talent in the room, whether that’s on the field or off the field. And folks who don’t do that, I think they’ll do it at their expense. I think for us, we try to get the best talent we can, regardless of where you’re from. I think that our differences make us better. That’s both at a club level and at a league level.”
Leech’s comments come as a range of major corporations roll back their DEI hiring practices. Last month, the Trump administration also directed all federal DEI staff be put on paid leave before many lose their jobs. More

The National Collegiate Athletic Association updated its student-athlete policy to bar transgender women from competing in women’s sports.
The change follows President Donald Trump’s executive order that also banned trans women from women’s sports.
The NCAA previously deferred to sport governing bodies for trans athlete eligibility.

General signage before practice for the first round of the 2024 NCAA Tournament at PPG Paints Arena.
Charles LeClaire-USA TODAY Sports

The National Collegiate Athletic Association on Thursday updated its transgender student-athlete policy to prohibit trans women from competing in women’s sports, one day after President Donald Trump signed an executive order stating the federal government would defund schools that allow trans women to do so.
The new policy says students assigned male at birth may practice with women’s teams and receive related benefits such as medical care, but they are not allowed to engage in formal competition. All students, regardless of gender or sex, may compete on men’s teams, though athletes taking testosterone must complete a medical exemption process. Students assigned female at birth who are taking testosterone or engaging in hormone therapy are also banned from women’s teams.

The NCAA previously followed Olympic standards in deferring to sports’ national governing bodies in determining eligibility for trans athletes. The organization adopted that policy in January 2022.
“The NCAA is an organization made up of 1,100 colleges and universities in all 50 states that collectively enroll more than 530,000 student-athletes. We strongly believe that clear, consistent, and uniform eligibility standards would best serve today’s student-athletes instead of a patchwork of conflicting state laws and court decisions. To that end, President Trump’s order provides a clear, national standard,” NCAA President Charlie Baker said in a news release.
Baker told a Senate panel in December that he was aware of fewer than 10 current trans NCAA athletes.
Trump’s latest action builds on his previous executive order declaring that there are only two sexes and demanding federal agencies stop promoting “gender ideology,” which the White House said “replaces the biological category of sex with an ever-shifting concept of self-assessed gender identity.” He also signed an executive order banning transgender people from openly serving in the military.
In an Instagram video, transgender triathlete and trans rights advocate Chris Mosier said the policy’s focus on athletes’ assigned sexes at birth presents gender solely as a binary concept.

“It is mirroring the executive orders of the president in trying to legislate away trans and nonbinary identities,” Mosier said.
Mosier also said the policy affects intersex women and women who practice hormone therapy for medical reasons, such as to treat polycystic ovary syndrome. The NCAA does not mention a medical exception process for athletes to join women’s teams.
In a statement, LGBTQ+ advocacy group GLAAD said, “This move is deeply disturbing and not informed by any of the medical, scientific, and human rights expertise that has previously guided NCAA policy and keeps all student athletes safe.”
“It is also premature and purely a response from the inaccurate and incoherent rhetoric from the Trump White House and its attempt to intimidate educational institutions,” GLAAD said. “Students deserve leaders who will look out for their best interests instead of caving to bullies trying to legitimize discrimination and harm.”

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Tapestry’s shares shot up after the company reported strong holiday sales and raised its full-year outlook.
Coach’s parent company reported the results less than two months after calling off its merger with fashion accessories competitor Capri.
Coach remains the top performer, with brands Kate Spade and Stuart Weitzman putting up weaker results.

The logo of U.S. fashion brand Coach is seen in New York on Nov. 19, 2024.
Charly Triballeau | AFP | Getty Images

Shares of Coach parent Tapestry rose about 12% on Thursday after the company beat holiday-quarter sales expectations and boosted its full-year forecast.
The fashion and accessories company said it now expects full-year revenue of more than $6.85 billion, which would be about 3% higher than the prior year. It expects earnings per share of $4.85 to $4.90. It had previously forecast full-year revenue of more than $6.75 billion and full-year earnings per share of between $4.50 and $4.55.

Tapestry’s strong results come less than two months after it called off a merger with Capri, after planning to appeal the blocked deal. The agreement, which companies had fought for in court, would have married America’s two largest luxury houses and put six fashion brands under one company: Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Versace, Jimmy Choo and Michael Kors.
Tapestry’s results are also in sharp contrast to Capri’s. In Capri’s holiday quarter, which the company reported Wednesday, sales of Versace and Michael Kors tumbled by double digits. CEO John Idol took some of the blame, saying that the company had made missteps — including cutting lower-priced accessories that helped bring in newer customers.
In a CNBC interview on Thursday, Tapestry CEO Joanne Crevoiserat said consumers are still selective about spending, but Coach has won their business by delivering “innovation, relevance and value.”
“That’s what our brand-building principles are focused on,” she said. “We have confidence that these brand-building principles and our ability to connect with consumers, regardless of the environment, remains strong.”
Here is what Tapestry reported for the fiscal second quarter compared with Wall Street’s estimates, according to a survey of analysts by LSEG:

Earnings per share: $2.00 adjusted vs. $1.75 expected
Revenue: $2.20 billion vs. $2.11 billion expected

In the three-month period that ended Dec. 28, Tapestry’s net income decreased to $310.4 million, or $1.38 per share, from $322.3 million, or $1.39 per share, in the year-ago period. The company’s adjusted earnings per share figure excluded some one-time items, including an interest expense and a provision for income taxes.
Net sales rose to $2.20 billion from $2.08 billion in the year-ago quarter.
Coach remained the company’s top performer in the holiday quarter, with revenue up 11% year over year. Kate Spade and Stuart Weitzman put up weaker results, with revenue declines of 10% and 15%, respectively.
On Tapestry’s earnings call Thursday, CFO Scott Roe said the company’s full-year guidance includes the impact an additional 10% tariff on goods imported from China into the U.S. beginning Feb. 4. He said that is not expected to have a material effect on the company’s results, since it has very limited manufacturing in China.
Tapestry does not have any production in Canada or Mexico, he said. Roe had said on Tapestry’s early November earnings call that less than 10% of the company’s sourcing comes from China.

Growing on its own

Tapestry is looking inside of the company to drive growth. In a CNBC interview, Crevoiserat said that Tapestry will hold off on mergers and acquisitions until it makes sure Coach can maintain growth and Kate Spade returns to sustainable growth, too.
“It’s hard to put a timeline on it, but not in the near term,” she said of when the company would consider another deal.
Tapestry plans to rev up popular styles at Coach, invest in Kate Spade’s turnaround efforts, and focus on customer acquisition in underpenetrated markets, such as Europe and China.
Tapestry’s largest market is North America, with nearly 70% of its quarterly sales coming from the region in the holiday quarter. Yet Europe stood out with its gains in the holiday quarter. Revenue in the quarter rose 45% in Europe, 3% in Greater China and 4% in North America compared with the year-ago period. Sales in Japan, on the other hand, declined by 5% year over year in the quarter.
Crevoiserat said on the company’s earnings call that Tapestry’s “runway for growth is significant” in Europe, since it has lower sales and fewer customers there.
New and younger shoppers have also lifted Tapestry’s sales. Crevoiserat said on the company’s earnings call that Tapestry attracted about 2.7 million new customers in North America in the quarter and over half of those customers were Gen Z and millennials, she said.
One of the company’s bestsellers in the quarter, particularly with newer and younger shoppers, was the Tabby, a shoulder bag that Coach had made in different colors and materials, she said. Its newer New York collection of bags has proven popular, too — including the Brooklyn, a shoulder bag that sells for $295, and the Soft Empire Carryall Bag 40, which sells for $695.
Tapestry has ramped up its focus on Kate Spade, a brand that it’s trying to revive. Eva Erdmann, previously global president of L’Oréal’s Urban Decay Cosmetics, started as Kate Spade’s new CEO in October.
On the earnings call, Crevoiserat said Tapestry will slash the number of Kate Spade’s handbag styles by more than 15% this fall and “work to build blockbuster handbag families.” She said it’s also focused on using new, compelling items, not discounts, to drive Kate Spade’s sales.
“Decreasing our level of promotional activity will be a key building block of solidifying our brand and positioning it to scale in a healthy way globally over the long term,” she said.

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E.l.f. Beauty relies heavily on China for manufacturing and was “relieved” to learn new duties from President Donald Trump were only 10%.
“We actually were somewhat relieved when it was only 10 points, because at one time the rhetoric was as high as 60% tariffs,” CEO Tarang Amin told CNBC.
The company raised prices on a third of its items by $1 during the last round of tariffs, but isn’t sure if it will need to do so this time around.

The New York Stock Exchange welcomes E.l.f. Beauty on March 18, 2024, to celebrate its 20th anniversary of founding.

The CEO of E.l.f. Beauty, which manufactures about 80% of its cosmetics in China, told CNBC on Thursday that it was “relieved” the new tariff on Chinese imports is only 10%. The retailer isn’t sure yet if it will need to raise prices. 
“[It] seems like a weird thing to say, but we actually were somewhat relieved when it was only 10 points because at one time, the rhetoric was as high as 60% tariffs,” Tarang Amin said when discussing his company’s fiscal third-quarter earnings results.

With regard to raising prices, he said, “we’ll see whether we need to.”
The comments come just days after President Donald Trump slapped a new 10% tariff on goods imported from China into the U.S., raising concerns about companies such as E.l.f. with significant supply chains in the region.
While 25% tariffs on Mexico and Canada have since been paused for 30 days, Beijing and Washington have yet to come to an agreement, and China has hit the U.S. back with a slew of retaliatory measures, including blacklisting Calvin Klein’s parent company PVH Corp. 
The uncertainty around whether the new Chinese tariffs are here to stay has led some companies, such as Barbie maker Mattel, to say they will lean on price increases to offset the effect to profits. E.l.f. struck a similar tune in November when 60% tariffs still seemed like a possibility. 
“We also want to play it out. There’s so much back and forth going on right now. If there was a higher level of tariff, we don’t want to announce our pricing actions until we know kind of where we feel it’s really going to settle out,” he explained. 

When Trump put new 25% tariffs on China during his first term, Amin said the company raised prices on a third of its items by $1 and saw a “good consumer response,” even with its reputation for offering more affordable “dupes” of prestige cosmetics at drug store prices.
At the time, E.l.f. was manufacturing nearly 100% of its goods in China. This time around, it is in a better position after reducing its reliance on the region by about 20%. It also has a bigger international business and does more sales outside of the U.S. 
“The good thing, because we do have a long supply chain … we won’t face it this fiscal year. It won’t be until about, you know, well into our [fiscal year 2026] before we start seeing the value of that higher inventory,” said Amin. “So we have time to really make sure we have the playbook.”

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