e.l.f. Beauty's Chief Financial Officer, Mandy Fields, highlighted the company's exceptional financial performance, including its 29th consecutive quarter of net sales growth and its seventh consecutive year of annual growth. For the quarter ending March 31, the company reported adjusted diluted EPS of $0.32 and net sales of $449.3 million, marking a 35% year-over-year increase that surpassed Wall Street expectations. This impressive growth was significantly fueled by e-commerce, which surged by 63% for the year across its own direct-to-consumer sites, Amazon, and the integration of Rhode Skin. Retail channels also saw a 16% increase, with Sephora emerging as a key partner, facilitating Rhode's expansion into the EU later in the year.
Fields also delved into the strategic impact of the Rhode acquisition, a brand founded by Hailey Bieber. Rhode achieved $200 million in sales in less than three years with only 10 products, an outlier success in the celebrity beauty brand space. The acquisition significantly contributed to e.l.f. Beauty's overall growth, with Rhode itself generating $160 million. Fields emphasized the company's ongoing focus on its existing portfolio, including Naturium and the e.l.f. brand, rather than immediately seeking new acquisitions. She also addressed pricing strategies, noting that while some prices were increased on e.l.f. products, the company tested price reductions on a small portion (10%) of its portfolio, funded by tariff refunds, to optimize unit volume and sales.
Furthermore, Fields discussed the company's innovative approach to tariffs and marketing. e.l.f. Beauty anticipates a reduced average tariff rate of approximately 35%, down from 55% the previous year, and expects to receive $55 million to $58.5 million in tariff refunds, which will be reinvested to maintain gross margins and potentially lower retail prices. On the marketing front, the company allocates 24% to 26% of net sales to marketing and digital initiatives, focusing on cultural relevance and connecting with Gen Z, millennials, and Gen X consumers through campaigns like its Coachella activation and partnership with Survivor. This strategy has significantly boosted brand awareness from 13% to over 40%. Fields has also taken on the responsibility for the company's AI strategy, focusing on governance, readiness for agentic commerce with backend upgrades, and enhancing enterprise efficiency, including leveraging AI for forecasting and accounts payable within its SAP implementation.
