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Elf Beauty’s Comeback Hinges on Navigating Tariff Threats

Elf Beauty’s Comeback Hinges on Navigating Tariff Threats

(Bloomberg) -- Elf Beauty Inc. opted to absorb the first tariff hit of 10%. When that rose to 25%, the company started raising prices. Now, with talk of a third round on the horizon, Elf is watching and waiting.

The Oakland, California-based cosmetics company, which bills itself as an affordable and cruelty-free maker of beauty products, is in the process of hiking prices on about a third of its goods, Chief Executive Tarang Amin said in an interview. So far, the increases have only been implemented on Elf’s website, but will spread to all retailers over the next few months, he said.

The move is a response to tariffs on imports from China that climbed to 25% in June. Amin said the company assumes that competitors will be raising prices too.

See Also: Elf Beauty’s Beat-And-Raise Quarter Leads Analysts to Upgrade

Elf’s tariff strategy is the latest example of how the on-again, off-again cycle of tariffs -- and the threat of new ones -- is creating headaches for business owners during the Trump presidency. Another round of levies of as much as 10% is poised to go into effect on Sept. 1. This round would hit Elf again, making it more expensive to import the company’s beauty tools and brushes.

Elf mitigated the original 10% tariff last year via cost savings -- including the closing of its 22 retail stores in February. Amin said the company is taking a wait-and-see approach to the next wave.

Share Rebound

Elf shares hit an all-time low in February, but the company has rebounded since then. Elf’s stock has more than doubled since the beginning of 2019. Amin credited the advance to more investment in marketing and an improved digital strategy.

In February, Elf hired a chief marketing officer, who has focused on slower product releases and social media campaigns. The idea is to break through the noise of influencer-backed makeup brands Kylie Cosmetics and LVMH’s Fenty Beauty by Rihanna.

On Wednesday, the company raised its outlook for the year -- helping to spark a share gain of as much as 12% on Thursday. Amin said the company’s approach to the guidance is conservative, however, and management is waiting to “see how pricing impacts the business over a longer period.”

To contact the reporter on this story: Olivia Rockeman in New York at orockeman1@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder, Cécile Daurat

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