An Estee Lauder counter is seen on the floor of a department store in Brooklyn on Feb. 5, 2025 in New York City.
Spencer Platt | Getty Images
Several beauty stocks posted major losses this week, as companies such as E.l.f. Beauty and Estee Lauder reported disappointing earnings and cut guidance.
E.l.f. closed out its worst week since August 2018, with shares cratering nearly 29% over the five-day period. The cosmetics brand on Thursday posted a revenue beat for its fiscal third quarter, but missed on adjusted earnings per share and cut its full-year guidance to between $1.3 billion and $1.31 billion in sales, down from a prior range of between $1.32 billion and $1.34 billion.
CEO Tarang Amin told CNBC in an interview on the results that the cosmetics sector broadly declined 5% in January, which he attributed to a hangover from holiday discounting and a decrease in online attention to beauty products.
Analysts from Morgan Stanley, D.A. Davidson and UBS all downgraded the stock to neutral or equal weight following the report, citing the cut guidance.
Estee Lauder shares fell 22% on the week, marking that stock’s worst week since November. The company on Tuesday said it would cut between 5,800 and 7,000 jobs by the end of fiscal 2026 and that softening travel retail demand in Asia would damage its net sales in the third quarter.
The news sent shares tumbling despite a beat on second-quarter revenue and earnings per share.
“Simply said, we lost our agility. We did not capitalize on the higher-growth opportunities,” CEO Stéphane de La Faverie, who began in the position on Jan. 1, said on the earnings call.
Shares of Ulta Beauty and Coty also were under pressure this week, trimming 9% and nearly 8%, respectively, on the week. It was Ulta’s worst week since April, and Coty’s worst week since October.
On E.l.f. Beauty’s earnings call Thursday, Amin said the company saw “a little bit of softness” at Ulta, one of the brand’s retailers, in January.
The beauty sector, like others in the U.S., faces the threat of tariffs eating into its profits. China announced tariffs on select U.S. imports Tuesday in response to President Donald Trump’s additional 10% tariffs on Chinese goods.
E.l.f., for example, manufactures about 80% of its products in China, but Amin told CNBC that the company was “relieved” to see Trump impose tariffs of just 10%, when he had previously floated levies as high as 60%.
— CNBC’s Gabrielle Fonrouge and Adrian van Hauwermeiren contributed to this report.
