MW Gen Z may be shying away from cosmetics, as higher gas prices hit spending

By Bill Peters

E.l.f. Beauty says it will cut prices on some products, following tariff-related increases last year and concerns about the rising cost of gas

E.l.f. Beauty raised prices last August due to tariffs.

Through more than a half-decade of price increases, demand for beauty products has held up. But as rising gas prices strain budgets, demand may be starting to crack, at least among younger consumers.

E.l.f. Beauty, already known for low-priced cosmetics, said Wednesday that it would cut prices on some of its products to spur demand. It made a tariff-induced $1 price increase across its name-brand products last August, but so far customers aren't taking to the new spring-season product rollout as much as management had hoped.

Still, shares of E.l.f. $(ELF)$ rose 4.2% after hours on Wednesday. The company's fiscal fourth-quarter results beat Wall Street's estimates, helped by a jump in overall sales, although the full-year sales outlook came in short of expectations.

Shares of E.l.f. Beauty are down around 33% so far this year, and were trading at around $52 after hours on Wednesday. The stock is well off highs of more than $200 reached in 2024.

The company - which owns Hailey Bieber's Rhode brand and whose products are popular among Gen Z, Gen Alpha and millennials - did not say which products might see price decreases, or how much prices would go down, but said the moves would happen over the next few weeks.

"Our spring 2026 innovation is off to a slower start than we expected, and as a result, we're not seeing the lift across our core items at spring innovation as historically delivered," CEO Tarang Amin said on the company's earnings call.

He added: "As we look at the state of the consumer today, we have recently seen a more pronounced decline in units."

However, Amin said a recent decision to test a price cut of E.l.f.'s Halo Glow Skin Tint, to $14 from $18, led to jump in interest on Amazon (AMZN) and similar retailers, including on TikTok Shop. He also said some of E.l.f.'s newer products, like lip oil sticks that run for $10 and melting lip balms priced at $9 - well below prestige-tier offerings - were selling well.

But overall, Amin said he wasn't satisfied with the current spring-season trends. He said the company would accelerate the pace of new product development and lean on its international business, which currently drives around a fifth of E.l.f.'s sales.

The company's color cosmetics account for 21% of the selection at big-box chain Target, which earlier in the day touted gains in its beauty segment. However, investors remain concerned about difficult financial comparisons up ahead for Target (TGT), and the impact of higher gas prices.

E.l.f. reported fiscal fourth-quarter sales of $449.3 million, a 35% year-over-year jump, with adjusted earnings per share of 32 cents. Those results were above estimates for $423.1 million and 29 cents, respectively.

E.l.f. on Wednesday said it expects sales of around $1.835 billion to $1.865 billion for its fiscal 2027, which runs through March. The midpoint of that range was below FactSet estimates for $1.86 billion.

-Bill Peters

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May 20, 2026 18:51 ET (22:51 GMT)

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