E.l.f. Beauty experiences a decline in stock shares despite achieving its first $1 billion year.

• E.l.f. Beauty reported its first billion-dollar fiscal year with a 77% increase in sales.
• Despite exceeding Wall Street's expectations, the company anticipates its growth rate to moderate during the current fiscal year and be slower than analysts had predicted.
• Ulta Beauty CEO Dave Kimbell predicted a slowdown in the beauty industry, which led to E.l.f.'s growth.

On Wednesday, the retailer reported its first billion-dollar fiscal year with a 77% increase in sales, but its shares declined as it forecasted a slowing of growth.

The company known for its viral marketing and appeal to younger consumers issued guidance that fell short of analysts' expectations.

In its fourth fiscal quarter, E.l.f. Beauty outperformed Wall Street expectations, as indicated by a survey of analysts by LSEG.

• Earnings per share: 53 cents adjusted vs. 32 cents expected
• Revenue: $321.1 million vs. $292.6 million expected

The company's net income for the three-month period ending March 31 was $14.53 million, or 25 cents per share, compared to $16.25 million, or 29 cents per share, in the previous year. Excluding one-time items, E.l.f. reported earnings of 53 cents per share.

A year ago, sales were $187.4 million and have since increased by 71% to reach $321.1 million.

In the past year, the company's sales increased by 77% to reach $1.02 billion.

Over the past year, E.l.f. Beauty has experienced significant sales growth, with gains in the high double digits each quarter. This surge in demand is due to the popularity of its affordable beauty products, which are available through its website and at retailers such as Target and Ulta.

E.l.f. CEO Tarang Amin stated that he believes the company is still in the early stages of its growth journey and expects more growth in cosmetics, skin care, and international markets. However, the company's guidance suggests that it anticipates a slower growth pace than what Wall Street had predicted.

E.l.f. anticipates net sales to fall between $1.23 billion and $1.25 billion, representing a 20% to 22% increase. This is lower than the 27.4% uptick that analysts had predicted.

LSEG reports that the company's forecasted adjusted net income is between $187 million and $191 million, and adjusted earnings per share are between $3.20 and $3.25, which is below the $3.51 analysts had predicted.

In a surprising development, Ulta Beauty CEO Dave Kimbell cautioned that the demand for cosmetics was declining, causing its stock to drop 15% and negatively impacting shares of E.l.f and .

"Kimbell stated at a JPMorgan Chase-hosted investor conference that the total category has experienced a slowdown. Although they anticipated moderate growth in the category, they did not expect it to continue growing at the current rate, which has been strong for several years."

He stated that the slowdown has been "slightly earlier" and "more significant than anticipated."

The beauty giant, Ulta, will report earnings next week, revealing just how much their sales have slowed down.

Read E.l.f.'s full earnings release here.