e.l.f. Beauty (ELF) & Ulta Beauty (ULTA): Rhode Is Carrying e.l.f. Beauty. Ulta Is Winning on Rich Shoppers Instead

Ulta Beauty is experiencing robust growth driven by affluent customers upgrading to premium brands, while e.l.f. Beauty's success hinges on its newly acquired Rhode skincare and makeup line. Rihanna-founded Rhode contributed $160 million to e.l.f.'s sales, boosting the company's total earnings to $479.4 million quarter-over-quarter.

Ulta's quarterly sales rose 11% to $3.16 billion, while e.l.f.'s core brand experienced a decline. e.l.f.'s CFO, Mandy Fields, noted that Rhode appeals to women of various ages, not just Gen Z. The company raised full-year guidance for both sales and earnings per share (EPS). Ulta's stores saw a 5.3% increase in same-store sales, with higher average transaction values and more frequent visits, indicating strong, broad-based growth.

Ulta's loyalty program has expanded to 47 million members from 17 million a decade ago, and the company uses AI tools to personalize recommendations. Ulta has attracted investments from 56 hedge funds, while e.l.f. has drawn in 39. Despite the impressive earnings boost, much of e.l.f.'s growth is tied to Rhode's performance, raising concerns about the company's concentration risk.