E.l.f. Beauty forecast annual sales and profit below estimates on 8 August and said it would raise prices of its products if Republican presidential candidate Donald Trump comes to power and hikes tariffs on imports from China.

Shares of the company plunged about 10% in extended trading, even as Elf topped first-quarter estimates.

While E.l.f. has maintained its post-pandemic boom in demand by attracting customers for its affordable skincare and cosmetic products, the downbeat forecasts indicate that budget-strained customers were spending cautiously.

In recent months, investor concerns have also grown around the possibility of rising tariffs on imports of E.l.f.’s nearly 80% finished products manufactured in China and higher ocean freight costs, among other factors.

“E.l.f. is a victim of its own success … Its outlook didn’t match investors’ lofty hopes fueled by its stellar quarterly results,” Zak Stambor, analyst with eMarketer, said.

Increase in tariffs on imports from China, if Trump comes to power, would mostly impact the company in fiscal 2026, CEO Tarang Amin told Reuters.

“We don’t like 60% tariff just because we feel it is a tax on American consumers,” Amin said, adding that the tariffs impact would be addressed by raising product prices and diversifying supply chain operations.

Higher transportation costs related to Red Sea disruption are expected to offset annual gross margin benefits, a company executive said on a post-earnings call.

E.l.f. expects 2025 sales to be between $1.28 billion and $1.30 billion, versus analysts’ estimates of $1.30 billion, according to LSEG data.

It now expects annual adjusted per-share profit to be between $3.36 and $3.41, versus analysts estimates of $3.42 per share.

Net sales rose 50% to $324.5 million in the quarter ended June 30, beating estimates of $304.7 million. Adjusted profit of $1.10 per share topped expectations of 84 cents.