While many retailers are bracing for profits to take a hit due to the impact of tariffs, Oddity Tech is defying the trend, raising its outlook after another quarter of strong growth. The beauty and tech retailer, known for brands like Il Makiage and Spoiled Child, has hiked both its earnings and profit guidance for fiscal 2025. In a stark contrast to other companies, Oddity has no immediate plans to raise prices due to the effect of new levies.
Mitigating Initiatives and Optimistic Outlook
Despite the uncertainty around tariffs, Oddity remains confident in its ability to navigate these challenges. Finance chief Lindsay Drucker Mann told CNBC that the company has several “offsetting abilities” and does not expect to implement drastic measures. “We have other mitigating initiatives, and we’ll have to see ultimately where tariffs shake out. There’s also discussions on tariff rates being reduced, so we’ll have to wait and see where the administration ultimately lands,” she said.
In a news release, Oddity stated that it expects the tariff headwinds to be “manageable.” The company further emphasized that the tariff and trade-related impacts expected for 2026 are also likely to be manageable and largely offset by cost efficiencies.
Strong First-Quarter Performance
Oddity reported a strong fiscal first quarter, with earnings per share (EPS) of 69 cents, beating the expected 62 cents. The company’s revenue for the quarter was $268 million, up 27% from the same period last year. The strong performance led to a 15% surge in shares after the earnings announcement.
For the current fiscal year, Oddity has raised its revenue forecast to between $790 million and $798 million, up from the previous range of $776 million to $785 million. This new outlook exceeds analysts’ expectations of $784 million. The company also increased its expected adjusted earnings per share to between $1.99 and $2.04, above the prior range of $1.94 to $1.98.
Growth and Profit Margins
Oddity’s outlook also includes an improvement in its gross margin, now expected to be 71% for fiscal 2025, up from the previous forecast of 70%. Adjusted EBITDA is projected to be between $157 million and $161 million, an increase from the prior outlook of $155 million to $158 million.
The direct-to-consumer model is paying off, with Oddity outperforming the broader retail industry, which is facing mounting challenges from the uncertainty surrounding tariffs. While many companies are planning to cut costs to cope with potential price increases, Oddity’s higher profit margins set it apart. The beauty industry, often seen as resilient during economic downturns, is also positioning Oddity well to weather these turbulent times.
Outperforming the Market
So far this year, Oddity’s stock is up 11%, outperforming the S&P 500, which has experienced a 5.4% loss during the same period. The company’s focus on growth and its unique market position have helped it stay ahead, despite the challenges facing the broader economy.
Oddity’s exposure to tariffs is limited, particularly because the company sources most of its products from Europe rather than China, where tariffs are significantly higher. As a result, Oddity is less vulnerable to inflationary pressures caused by the ongoing trade dispute.
Conclusion
Oddity Tech’s ability to navigate tariff uncertainties, combined with strong growth in its first quarter, positions the company for continued success in a challenging retail environment. Its resilient business model, focused on direct-to-consumer sales and cost efficiencies, allows it to manage the impact of tariffs and maintain a positive outlook for the future.
