What happened

Shares of e.l.f. Beauty, Inc. (NYSE:ELF), a multi-channel brand retailer and distributor of high-quality cosmetic and skin care products, plunged 28% as of 1:38 p.m. EDT Thursday after announcing second-quarter earnings.

So what

Revenue during the second quarter increased 6% to $59.1 million, compared to the prior year, which was in line with analysts' estimates. Adjusted earnings-per-share checked in at $0.13, which is more than double analysts' estimates calling for adjusted earnings of $0.06 per share.

A woman having multiple cosmetic products applied to her face.

Image source: Getty Images.

In a press release, Chairman and CEO Tarang Amin said:

"We are working to improve trends at select national retailer partners and are confident in our long-term potential. Our brand continues to resonate with consumers, as demonstrated by our expansion within leading retailers. We believe there is significant whitespace for the e.l.f. brand and seek to deliver shareholder value through the capabilities of our broader platform."

Now what

Despite meeting estimates on the top line and beating them on the bottom line, its outlook for the rest of the year raised concern. Management lowered its full-year 2018 revenue guidance to low single digits from its prior range of between 6% and 8%. It lowered its adjusted EBITDA from a range of $65 million to $66.5 million down to between $58 million and $62 million. It also dropped the bottom end of its adjusted earnings per share from $0.59 per share down to $0.56 per share, while leaving the top end at $0.61 per share.

Management made it clear that it's time to increase investment behind its brands because the competition for younger consumers is fierce, but that's a move that came late and could make the back half of 2018 a little more painful than anticipated.