By Granth Vanaik

(Reuters) - Elf Beauty ( ELF ) raised annual sales and profit forecasts after topping first-quarter estimates on Thursday, as more customers visited stores and websites to buy its affordable cosmetics and skincare products.

Beauty company Elf, like its peers in the segment, has sustained the post-pandemic boom in demand, as low-cost products from its brands such as Naturium, Skin, and Cosmetics continue to attract customers, including those having strained budgets due to a sticky inflation.

Retailers, such as Target, which house Elf's products, have also seen sales surge for beauty products in recent months.

"We have seen consumers are getting choosier, but they're choosing Elf," CEO Tarang Amin told Reuters.

Elf's stock, however, has dropped about 14% quarter-to-date, after investors raised concerns around possibility of rising tariffs on imports of its nearly 80% finished products manufactured in China and higher ocean freight costs, among other factors.

CEO Amin said that an increase in tariffs on imports from China, if Republican presidential candidate Donald Trump comes to power, would mostly impact the company in fiscal 2026.

Earlier this year, Trump had floated the idea of imposing tariffs on China again if he wins the presidential election in November and said the rate for such tariffs could exceed 60%.

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

Elf now sees 2025 sales to be between $1.28 billion and $1.30 billion, compared to previous expectations of $1.23 billion and $1.25 billion.

It now expects annual adjusted per-share profit to be between $3.36 and $3.41, versus prior projections of $3.20 and $3.25.

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