e.l.f. Beauty said net sales jumped 51% to $520.8 million in its fiscal second quarter, its 31st consecutive quarter of growth, as the cosmetics maker raised its full-year outlook and benefited from tariff refunds tied to this year's Supreme Court ruling against the Trump administration's emergency-powers duties.
"I am proud of the e.l.f. Beauty team for delivering our 31st consecutive quarter of net sales growth, with net sales up 51% driven by strength across our portfolio," Chairman and Chief Executive Tarang Amin said in the company's earnings release. "With this momentum, we are raising our full-year net sales guidance to 22 to 24 percent."
Gross margin rose about 160 basis points to 71% for the quarter ended Sept. 30, which the company said reflected roughly 30 basis points of benefit from incremental refunds of tariffs collected under the International Emergency Economic Powers Act, along with lower year-over-year duties and a favorable sales mix, partly offset by price investments. Over the first six months of the fiscal year, the IEEPA-refund benefit to gross margin was more pronounced, at roughly 520 basis points, helping push the six-month gross margin up 760 basis points to 77%.
The refunds trace back to the Supreme Court's February ruling that the law does not authorize the tariffs the administration imposed on imports, including from China, where e.l.f. has said about three-quarters of its global production is based. A federal judge in March ordered customs officials to recalculate and refund duties already collected, with interest.
e.l.f. posted GAAP net income of $30.0 million, or $0.50 a share, for the quarter; on an adjusted basis, net income was $72.7 million, or $1.21 a share. Adjusted EBITDA rose 86% year over year to $123.4 million. Selling, general and administrative expenses climbed $69.0 million to $300.1 million, driven largely by marketing, merchandising and distribution costs. The company also recorded a $17.7 million charge tied to its rhode acquisition, reflecting the skincare brand's revenue outperforming the earnout targets set when e.l.f. bought it.
For the full year, e.l.f. now expects net sales of $2.003 billion to $2.029 billion, up from a prior range of $1.938 billion to $1.968 billion, with adjusted earnings per share guided to $3.82 to $3.86, versus $3.50 to $3.55 previously. The company ended the quarter with $350.8 million in cash and $826.7 million in total debt.
