e.l.f. Beauty Inc. (NYSE: ELF) saw its stock price plummet 27.89% in after-hours trading on Wednesday following the release of its quarterly earnings report and disappointing annual forecast. Despite beating earnings estimates, the cosmetics maker faced headwinds from tariff-related costs and a challenging consumer spending environment.

For the second quarter, e.l.f. Beauty reported adjusted earnings per share of $0.68, surpassing the analyst consensus estimate of $0.57. However, quarterly sales of $343.936 million fell short of expectations, missing the projected $366.430 million by 6.14%. The company's gross margin also declined by approximately 165 basis points to 69% compared to the same period last year.

The sharp stock decline was primarily driven by e.l.f. Beauty's fiscal 2026 forecast, which came in below Wall Street estimates. The company expects full-year net sales between $1.55 billion and $1.57 billion, significantly lower than analysts' expectations of $1.65 billion. Additionally, e.l.f. Beauty projects adjusted profit in the range of $2.80 to $2.85 per share, falling short of the $3.58 per share estimate. The lowered guidance reflects ongoing challenges, including over $50 million in annual costs from higher tariffs and concerns about lower-income shoppers seeking cheaper alternatives in a frugal consumer spending environment.