e.l.f. Beauty: "Indie Brands" That Source from China May Be in Peril

One of the biggest growth stories in cosmetics since the pandemic has been the rise of e.l.f. Beauty (ELF). But that story may be put on hold as the U.S. narrows its trade war to primarily focus on China.

e.l.f. has been working to diversify its supply chain, but about 80% of the company’s products still come from China. I Photo: e.l.f. Cosmetics Facebook

While the top exporters of cosmetics and skincare are South Korea and France — which now face a 10% tariff rate — e.l.f. has relied on sourcing from China to keep prices low for its value-oriented beauty offerings, Grace O’Donnell reported for Yahoo Finance.

In a company presentation in December 2024, e.l.f. CFO Mandy Fields said the company has been working to diversify its supply chain, but about 80% of the company’s products still come from China.

Those imports are now subject to a 245% tariff rate. Over the past year, e.l.f. stock has fallen 68%. Executives at rival beauty giant L'Oréal see an opportunity to regain market share from e.l.f.

“What is true is that, in the world of indie brands, very clearly ... many of them ... have been relying a lot on China,” L'Oréal CEO Nicolas Hieronimus said during the company’s earnings call.

“If I take one of my favorite brands, which is NYX Professional Makeup, over the last couple of years we’ve really worked at reducing the exposure of NYX to Chinese-imported products. I think now it’s around 20%, which is not nothing, but it’s only 20%.

And we know that some of our very direct competitors are closer to 80%. So at some point ... [if] the tariffs against China are confirmed and stand, it will indeed benefit some of our brands — and makeup in particular.”