What happened

It's May, three months after cosmetics seller e.l.f. Beauty (ELF 1.96%) last reported earnings, and you know what that means: It's time for e.l.f. stock to go down again.

Yesterday after close of trading, e.l.f. Beauty reported the results of its "transition period ended March 31, 2019" -- a quarter that marks both "Q1 2019" for e.l.f. and, because the company is switching fiscal calendars, also the end of "fiscal 2019" as a whole. Whatever you call it, though, the numbers e.l.f. reported for this just-ended quarter were not great.

e.l.f. stock dropped as much as 19% in response to the news earlier today and remains down 9.8% as of 1:45 p.m. EDT.

Frowning child wearing Santa elf hat.

Image source: Getty Images.

So what

Sales in the quarter ending in March increased a bare fraction of 1%, to $66.1 million. Profits on those sales, however -- well, there were none. Profitable by a penny a share in Q1 2018, this year e.l.f. lost $0.37 per diluted share.

Granted, e.l.f. management tried to put a brave face on the news, arguing that sales actually increased something closer to 3% "after excluding the impact of [closing 22 retail ] e.l.f. stores." But even so, gross margins were flat at 61%, while operating costs grew to 56% of sales, eating deep into profits. After accounting for restructuring costs, this left e.l.f. with a loss on the bottom line.

Now what

With its "transition period" now behind it, e.l.f. says its results for the period it's now designating "fiscal 2019" were $268 million in sales, resulting in $0.66 per share in earnings. The next 12 months, which will henceforth be known as "fiscal 2020," should see between $235 million and $245 million in sales (so a decline of about 10%) and earnings of between $0.35 and $0.39 per share.

Taken at the midpoint, therefore, e.l.f. is saying investors can expect earnings to decline by a steep 44% over the course of the coming year -- which sounds to me like a great reason to sell e.l.f. stock.