((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Updated share price fall from paragraph 2) by Nell Mackenzie
Muddy Waters took a short position in cosmetics company Elf Beauty
ELF.N , the hedge fund’s chief executive, Carson Block, said at the Sohn conference in London on Wednesday.
Elf shares fell 10% during the day, after Mr. Block claimed at the conference that Elf had overestimated its revenue over the past three years, perhaps as much as 190%. million dollars.
Elf, which is headquartered in California, did not immediately respond to Reuters requests for comment by email and telephone about Mr. Block’s allegations.
Mr. Block said Muddy Waters would short its position in Elf after releasing its report on the company, for reasons of fiduciary responsibility and risk management.
Mr Block questioned the explanation given by Elf when it published its results in November last year regarding an additional $37 million in inventory during the second quarter.
The company said at the time that this was because it was taking possession of inventory from China at the time of shipment rather than waiting for it to arrive at its U.S. distribution center.
Mr. Block said Wednesday that Muddy Waters spoke with Elf’s Chinese suppliers and a former manager in China and concluded that the way those inventories were accounted for was “categorically wrong.”
Muddy Waters claimed in a presentation that Elf overstated its inventory to cover insufficient sales.
In a public statement, Elf said its net sales were just over $1 billion in the fiscal year that ended March 31, 2024.
Swiss
