Felipe Peerally filed a shareholder derivative complaint against E.L.F. Beauty's board and executives, alleging they breached fiduciary duties by concealing declining demand trends from May 25, 2023 through February 6, 2025. The suit alleges directors knew of plummeting sales but falsely assured investors that growth would continue.
According to the complaint, E.L.F. Beauty sells cosmetics through subsidiaries including e.l.f. Cosmetics, e.l.f. Skin, Well People, Naturium, and Keys Soulcare, operating primarily as a retail distributor with significant U.S. presence and direct-to-consumer online sales.
The lawsuit alleges defendants observed declining sales from major retailers, rising inventory levels, and repeated failures of key innovation products, but told investors the company was ordering more inventory to meet strong demand. On August 8, 2024, the company disclosed weaker-than-expected guidance, causing the stock to drop more than 14% in one day.
On February 6, 2025, E.L.F. Beauty reduced its fiscal 2025 revenue and adjusted EBITDA guidance, citing slower new product performance, lower demand trends, and challenging category conditions. The stock fell $17.36 per share, or 19.90%, closing at $71.13 on February 7, 2025, down from $88.49 the previous day.
The derivative suit targets CEO Tarang Amin, CFO Mandy Fields, and nine current and former directors. A related securities class action was filed March 6, 2025, as case No. 5:25-cv-02316. Peerally's counsel served a demand on the board June 13, 2025, which the board deferred "until a later point in time" in a September 29, 2025 letter.