Raphael Stevens

E.l.f. Beauty raised its full-year guidance for a second quarter in a row after beating Wall Street’s estimates on the top and bottom lines.
The cosmetics company, known for its viral TikTok marketing and middle-of-the-road pricing, saw sales jump 76% compared with the prior year.
E.l.f. is expecting sales to grow between 55% and 57% for the full year.

Elf Beauty cosmetics
Courtesy: ELF Beauty

E.l.f. Beauty raised its full-year outlook for the second quarter in a row on Wednesday after posting another 76% year-over-year sales jump, beating Wall Street’s expectations. 
The cosmetics company, known for its viral TikTok marketing and middle-of-the-road pricing, also saw profits nearly triple compared with the year-ago period. 

Shares jumped about 9% in extended trading Wednesday.
Here’s how E.l.f. did in its fiscal second quarter, compared with what Wall Street was anticipating, based on a survey of analysts by LSEG, formerly known as Refinitiv:

Earnings per share: 82 cents, adjusted, vs. 53 cents expected
Revenue: $215.5 million vs. $197.1 million expected 

The company’s reported net income for the three-month period that ended Sept. 30 was $33.3 million, or 58 cents per share, compared with $11.7 million, or 21 cents per share, a year earlier. Excluding one-time items associated with stock-based compensation and intangible assets, as well as other items, E.l.f. reported adjusted earnings of $47.1 million, or 82 cents per share. 
Sales rose to $215.5 million, up 76% from $122.3 million a year earlier. During the previous quarter, sales were also up 76%. 
The strong results prompted the company to raise its full-year outlook for the second quarter in a row. It now expects net sales to increase between 55% and 57% to an estimated range of $896 million to $906 million. That’s ahead of projected full-year sales of $852 million, or growth of 47.1%, that analysts had expected, according to LSEG.

E.l.f. previously expected sales to be up between 37% and 39% to between $792 million and $802 million. 
The company also raised its adjusted profit guidance. It now expects full-year adjusted earnings to be between $144 million and $146 million, compared with a previous range of $125 million to $127 million. It’s expecting adjusted earnings per share to be between $2.47 and $2.50, compared with a consensus estimate of $2.46, according to LSEG. E.l.f. previously expected full-year adjusted earnings per share to be between $2.19 and $2.22.
During the quarter, the company increased its marketing spend, helping to propel sales. But CEO Tarang Amin said E.l.f.’s success is more than just effective advertising. 
When asked what drove sales, Amin told CNBC it was “Our value equation, the ability to make prestige quality at these extraordinary prices, our holy grail innovation, taking inspiration from both prestige and our community, and having products consumers can’t seem to get enough of.”
Digital sales were up about 75% during the quarter, and international sales came in 157% higher year over year, Amin said. E.l.f.’s skincare line, which is popular with younger consumers, was also up over 100%, the chief executive said. 
When asked how long Wall Street can expect to see such strong sales growth, Amin said the company’s raised guidance “speaks for itself.” 
“We’re quite bullish about the future and particularly in terms of how we’re positioned,” said Amin, who got his start working for consumer product companies such as Procter & Gamble and Clorox. “We’ve doubled our market share in the last three years, and I feel we can double our market share again over the next few years.”
E.l.f.’s margins for the quarter came in at 71%, up 5.7 percentage points from the year-ago period. That increase was attributed to lower inventory adjustments, cost savings and mix, improved transportation costs and favorable foreign exchange rates. 
E.l.f. started out as an online-only company, and while it continues to sell directly to consumers on its digital channel, it has a strong presence in drug stores and mass retailers such as Walmart and Target. Despite the heavy wholesale presence, Amin said E.l.f. is able to maintain high margins because it sees high volumes and doesn’t lean on promotions and discounting in the same way other retailers do. 
“When retailers display our brand, we ask them to do it at full retail, because it’s a great value everyday,” said Amin. “So that’s one. Two is, given this value equation, we have incredible volumes, and so the volumes really help us when it comes to the efficiency of how we operate our supply chain.” More

Toyota’s profit more than doubled, driven in part by strong demand for hybrids.
The Japanese auto giant is primed to benefit from a slowdown in EV demand in the U.S.
Toyota also raised its outlook for its full fiscal year.

A 2022 Toyota Mirai hydrogen fuel cell vehicle, right, next to Toyota Prius hybrid vehicles during AutoMobility LA ahead of the Los Angeles Auto Show in Los Angeles, California, U.S., on Wednesday, Nov. 17, 2021.
Bing Guan | Bloomberg | Getty Images

Toyota Motor on Wednesday said its quarterly profit more than doubled from a year ago on strong global demand for hybrids and favorable exchange-rate moves.
The auto giant also raised its guidance for the fiscal year that will end on March 31 and increased its dividend and share-repurchase program. Its U.S.-traded shares closed 6% higher Wednesday.

Toyota for years resisted making big investments in purely electric vehicles, saying repeatedly that it felt its well-regarded hybrids were a better bet for most customers. The company finally relented in June, unveiling an aggressive plan to make big investments in advanced batteries and to boost sales of its EVs to 1.5 million per year by 2026. It said Tuesday that it will spend $8 billion to greatly expand a battery plant currently under construction in North Carolina, set to open in 2025.
But with car shoppers, particularly in the U.S., edging away from EVs amid higher financing costs and concerns about public charging, Toyota is now in the position of benefiting from higher demand for its stalwart hybrids.
Sales of Toyota’s conventional hybrids rose 41% from a year ago, to about 888,000, and sales of its plug-in hybrids were up nearly 90% year-over-year to roughly 39,000. “Electrified vehicles,” including both types of hybrids, battery-electric models, and fuel cell-powered vehicles, made up 36.4% of Toyota’s total global sales in the quarter, up from 27.3% a year earlier.
Toyota said its operating profit in the quarter that ended on Sep. 30, the second quarter of its 2024 fiscal year, increased more than 155% from a year ago to 1.44 trillion yen ($9.5 billion). Strong pricing on Toyota’s hybrid models, including its new Prius, helped drive the year-over-year operating profit increase.
Toyota’s revenue of 11.44 trillion yen ($75.7 billion) was 24% higher than a year ago, as it sold more vehicles in all regions than it did in the year-ago period. Total vehicle sales were up almost 13% from a year ago, to 2.4 million.

Part of Toyota’s year-over-year profit increase was driven by exchange rates, specifically the weakening of the yen against the U.S. dollar and euro. On average, during the quarter, $1 was worth 145 yen, up from 138 yen in the same quarter of 2022. The move was even more dramatic in euro terms, from an average of 139 yen per euro a year ago to 157 yen per euro in the period.
Toyota also boosted its profit forecast for the fiscal year that will end on March 31. It now expects profit of 4.5 trillion yen ($29.8 billion), up from 3 trillion yen in its earlier guidance. It said it expects the weaker yen to account for the majority – about 1.2 trillion yen – of that increase.
The company also announced a 100 billion yen ($662 million) share buyback and increased its dividend by 5 yen from a year ago, to 30 yen (20 cents) per share. More

Netflix said Wednesday its cheaper, ad-supported tier has amassed 15 million global monthly active users.
That’s triple the most recent figure, disclosed in May, and notable growth for Netflix as it laps a year since rolling out the new subscription option.
The streaming giant introduced its ad-supported plan alongside a password-sharing crackdown in an effort to drive revenue amid slowing subscriber growth.

The Netflix logo is displayed at its corporate offices in Los Angeles on Sept. 25, 2023.
Mario Tama | Getty Images

Netflix said Wednesday its cheaper, ad-supported tier has amassed 15 million global monthly active users.
That’s triple the most recent figure, disclosed in May, and notable growth for Netflix as it laps a year since rolling out the new subscription option.

Shares of Netflix closed up roughly 2% Wednesday.
The streaming giant introduced its ad-supported plan alongside a password-sharing crackdown in an effort to drive revenue amid slowing subscriber growth.
The move has proved fruitful so far. In the company’s third-quarter report, Netflix said it added 8.8 million subscribers, more than Wall Street expected, and that it expects a similar bump in subscriber growth in the fourth quarter.
Netflix has been looking to amp up its ad tier with new features for advertisers and users alike.
Newly instated President of Advertising Amy Reinhard said in a blog post Wednesday that advertisers can now choose to run 10-, 20-, and 60-second ads, in addition to the 15- and 30-second spots offered. The move will allow advertisers “around the world multiple formats to leverage,” Reinhard said.

Members of the ad tier can also expect some new features coming their way. Netflix said it will roll out higher 1080p streaming resolution for ad tier users in addition to 720p. Users will also be able to download movies and series to their devices starting at the end of this week.
In a push to appeal to binge watchers, beginning in the first quarter of 2024, Netflix will present an ad-free episode after users watch three consecutive episodes of a series.Don’t miss these stories from CNBC PRO: More

Norwegian Cruise Line is canceling Israel stops into 2024.
The cruise company cut its profit forecast, also citing the Maui, Hawaii, wildfires.

The passenger cruise ship Norwegian Prima arrives at the French Mediterranean port of Marseille. (Photo by Gerard Bottino/SOPA Images/LightRocket via Getty Images)
Gerard Bottino | Lightrocket | Getty Images

Norwegian Cruise Line Holdings on Wednesday said it would cancel its stops in Israel this year and into 2024, as that country’s war with militant group Hamas continues to escalate.
The company slashed its full-year outlook, also citing the wildfires in Maui, Hawaii. Norwegian said it now expects adjusted per-share earnings of 73 cents for the year, compared with its prior forecast of 80 cents.

Shares of the company fell more than 3% on Wednesday.
The Israel conflict has also impacted broader cruises to the Middle East area beyond just its Israel stops, the company said on its earnings call. Last week, rival cruise line Royal Caribbean Group said canceled sailings to Israel will negatively impact its earnings for the year by 3 cents a share.
Norwegian remains optimistic that the Israel conflict will be short term, company executives said on the earnings call, so the company is bullish about the ability to return to the Middle East soon.
“One of the main strengths and differentiators in our industry is our ability to reposition our assets, which is what we’ve done with the heightened tensions in the Middle East,” CEO Harry Sommer said on the call. “The safety and well-being of our guests and crew members are without a doubt our number one priority.”
The cruise company also the wildfires in Maui forced Norwegian to modify some August itineraries. Though regular stops resumed in September, the company said it experienced a slowdown in bookings – which has since improved to almost normal levels – concentrated in the fourth quarter.
The company lowered its 2023 occupancy outlook to 102.6% from 103.5%, citing the disruptions affecting fourth-quarter performance. More

Southwest Airlines flight attendants would get 36% cumulative pay increases in a new five-year contract.
The deal is still subject to ratification by the union’s members.
The flight attendants are the latest aviation labor group to win proposed pay hikes after tense years-long negotiations.

Southwest Airlines Boeing 737-700 aircraft is seen landing at dusk time at Ronald Reagan Washington National Airport in Arlington, Virginia.
Nicolas Economou | Nurphoto | Getty Images

Southwest Airlines flight attendants would get 36% cumulative pay increases in a new five-year contract, according to details of the tentative agreement shared with crews Wednesday.
The flight attendants are the latest aviation labor group to win proposed pay hikes after fraught years-long negotiations for new labor details. Pilots, flight attendants and other airline workers argued they went years without raises after the Covid-19 pandemic derailed talks and had pressed companies for higher compensation and better work rules as travel returned.

The new labor deal includes a 20% raise in January at the deal’s signing and 3% after, plus retroactive raises going back to late 2019, according to a union message to flight attendants.
The deal is still subject to ratification by the union’s members. Flight attendants are scheduled to start voting on the tentative agreement mid-November.
If approved, Southwest will also increase pay for on-call flight attendants by 8% and provide overtime pay if they are called into work outside of their on-call window.
Pilots and flight attendants have repeatedly complained about unpredictable schedules and difficulties getting assignments during flight disruptions. It was particularly pronounced during Southwest’s meltdown during the end-year holidays in 2022.
Southwest declined to comment Wednesday. It is still negotiating with its pilots.Don’t miss these stories from CNBC PRO: More

Halloween is over, and your local Spirit Halloween is getting ready to close.
As retail store closures have ramped up in recent years, Spirit Halloween opened a record number of new locations this year.
The chain is at work year-round securing its retail locations and selling through its website.

The facade of seasonal Halloween decor store Spirit Halloween at a shopping center in Dublin, California, on Aug. 23, 2018.
Smith Collection | Archive Photos | Getty Images

Halloween is over, and your local Spirit Halloween is about to become a ghost town.
It’s open Wednesday for clearance sales. On Thursday, it’ll close. But its work is not yet done. In fact, it continues all year.

The inventory carryover from season to season is “very minimal,” a representative for Spirit Halloween said. But costumes that were not sold and remain in good condition are stored for the next spooky season. Merchandise is also available to purchase all year through Spirit Halloween’s website.
As for the upward of 40,000 employees Spirit Halloween hired this season, a representative for Spirit Halloween said many are offered the ability to stay onboard with the company in a role at mall retailer Spencer’s Gifts, also owned by Spirit Halloween’s parent company, Spencer Spirit Holdings.
The Halloween chain is also nearly fully vertical, with Spirit Halloween handling all the “sourcing, design and manufacturing” itself, CEO Steven Silverstein said Monday on CNBC’s “The Exchange.” “Spirit has become such a phenomenon that no other market can keep up with it,” Silverstein said.

Spirit Halloween stores are known for “possessing” abandoned store fronts for the Halloween season and vanishing without a trace after the spooky holiday, making it a popular online meme whenever something shuts down.
The retailer opened a record 1,506 stores this season, up more than 50 stores from 2022, Spirit Halloween told CNBC. Locations have more than doubled since 2009, the company added.

Dead stores rise from the grave

But these store openings aren’t conventional. Since Spirit Halloween locations are only open a few months out of the year, the company does not have to build a new storefront or enter into a long-term lease to open its more than 1,500 locations.
A representative from Spirit Halloween told CNBC that the operations team works year-round to secure locations, often committing to a storefront as early as the spring and as late as the first week of October.
For landlords, it means someone is leasing their space, if even for a few months. Store closures have ramped up in recent years, as struggling retailers such as Bed Bath & Beyond, Rite Aid and CVS Pharmacy close large swaths of locations across the country. These become opportunities for Spirit Halloween, then, as the company pays to use the abandoned space for the Halloween season.
The store locator on its website even lists the previous occupant of the retail space before Spirit Halloween took over.

A screenshot of Spirit Halloween’s online store locator on Nov. 1, 2023, which shows what previously occupied the retail space.
Drew Richardson | CNBC

“We have built great relationships with our real estate partners over the years,” a representative for Spirit Halloween told CNBC. “It is a win-win for all parties involved.”
The company is also flexible in its preferences of retail space. Spirit Halloween considers locations in anywhere from strip centers to shopping malls, with square footage ranging between 5,000 and 50,000.
“No store is too large or too small,” the company told CNBC.
“It’s crazy how the stores just pop up,” said shopper Maria, 16, on Saturday. She and her friend Jane, 17, were waiting in a wrapped-around line outside a New York Sprit Halloween location. “Then they just disappear,” she said.
The store, in Manhattan’s Upper West Side, was opened in the former location of Harmon Face Values, a health and beauty retailer that was owned by now-bankrupt Bed Bath & Beyond. The location closed in February 2022.

Tricks, treats and travails

Outside a Spirit Halloween store in New York City on Oct. 31, 2023.
Drew Richardson | CNBC

It takes nine to 11 days for a Spirit Halloween store to go through the opening process, the company told CNBC. The short setup time gives the retailer a leg up over traditional retail openings, said GlobalData retail analyst Neil Saunders.
“Spirit Halloween doesn’t have to pay too much attention to things like flooring and construction, which are usually very time consuming when opening new shops,” Saunders said.
Opening in a temporary spot can have its drawbacks, however. Inside one Spirit Halloween location in New York City, customers are met with humid air and the hum of several plug-in fans.
“The AC went out my first week here,” said one of the location’s managers, who declined to be named since they weren’t authorized to comment. “Since we’re only here a couple months, I think it’s not worth fixing, in their opinion.”
After walking out of a packed Spirit Halloween location — a former CVS Pharmacy — in New York’s Brooklyn Heights neighborhood on Friday, a woman who wished only to be identified as Lana said it’s funny that the stores open in different spots every year.
“It can make them hard to find,” said Lana, 35. She had just purchased Spider-Man and marshmallow costumes for her two children.
“I’m from Russia and we don’t typically celebrate Halloween there,” she said. “So, I’m a casual celebrator of Halloween.”
But Americans take Halloween seriously. The National Retail Federation said Americans were expected to spend a record $12.2 billion on the spooky holiday this year, exceeding pre-pandemic levels.

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