Several beauty stocks suffered significant declines this week, as companies like E.l.f. Beauty and Estee Lauder reported underwhelming earnings and revised their guidance downward.
E.l.f. Beauty endured its worst week since August 2018, with shares plummeting nearly 29% over the five-day period. Despite posting a revenue beat for its fiscal third quarter on Thursday, the cosmetics brand missed expectations on adjusted earnings per share and reduced its full-year sales guidance to a range of $1.3 billion to $1.31 billion, down from the prior forecast of $1.32 billion to $1.34 billion.
CEO Tarang Amin explained in an interview that the broader cosmetics market saw a 5% decline in January, which he attributed to a post-holiday promotional slowdown and waning online interest in beauty products.
Following the earnings report, analysts from Morgan Stanley, D.A. Davidson, and UBS downgraded E.l.f. Beauty stock to neutral or equal weight, citing the lowered guidance.
Estee Lauder also faced a sharp decline, with shares dropping 22% for the week—its worst performance since November. On Tuesday, the company announced plans to eliminate between 5,800 and 7,000 jobs by the end of fiscal 2026, citing weakened travel retail demand in Asia as a factor that will negatively impact third-quarter net sales.
Beauty StocksDespite surpassing expectations on second-quarter revenue and earnings per share, the stock tumbled on the announcement.
“Simply said, we lost our agility. We did not capitalize on the higher-growth opportunities,” CEO Stéphane de La Faverie, who assumed the role on January 1, stated during the earnings call.
Shares of Ulta Beauty and Coty also struggled this week, shedding 9% and nearly 8%, respectively. This marked Ulta’s worst week since April and Coty’s steepest decline since October.
During E.l.f. Beauty’s earnings call on Thursday, Amin noted that the company experienced “a little bit of softness” in January at Ulta, one of its key retail partners.
The beauty sector, like other industries in the U.S., faces the potential impact of tariffs on its profit margins. On Tuesday, China announced tariffs on select U.S. imports in response to additional 10% tariffs imposed on Chinese goods by President Donald Trump.
E.l.f. Beauty, which manufactures roughly 80% of its products in China, has been closely monitoring the situation. Amin told that the company felt “relieved” that Trump ultimately imposed a 10% tariff instead of the previously proposed 60% levy.
