E.l.f. Beauty to acquire Hailey Bieber skincare brand Rhode in up to $1 billion deal
E.l.f. Beauty announced on Wednesday plans to acquire Hailey Bieber's beauty brand Rhode in a deal worth up to $1 billion as the cosmetics company looks to expand further into skincare.
The acquisition – E.l.f.'s biggest ever, according to FactSet – is comprised of $800 million in cash and stock, plus an additional potential $200 million payout based on Rhode's performance over the next three years. The deal is expected to close in the second quarter of the company's fiscal 2026 — or later this year.
"I've been in the consumer space 34 years, and I've been blown away by seeing this brand over time. In less than three years, they've gone from zero to $212 million in net sales, direct-to-consumer only, with only 10 products. I didn't think that was possible," CEO Tarang Amin told CNBC in an interview. "So that level of disruption definitely caught our attention."
In a news release, Bieber said she's excited to partner with E.l.f. to bring her brand to "more faces, places, and spaces."
"From day one, my vision for rhode has been to make essential skin care and hybrid makeup you can use every day," said Bieber. "Just three years into this journey, our partnership with e.l.f. Beauty marks an incredible opportunity to elevate and accelerate our ability to reach more of our community with even more innovative products and widen our distribution globally."
Launched in 2022, Rhode has more than doubled its customer base over the past year and generated $212 million in revenue in the 12 months ended March 31. The company's growth has primarily come through its website, but it plans to launch in Sephora stores throughout North America and the U.K. before the end of the year.
As part of the acquisition, Bieber will serve as Rhode's chief creative officer and head of innovation, overseeing creative, product innovation and marketing. The brand was launched alongside two co-founders, Michael and Lauren Ratner, but it was Bieber's influence and name that turned it into a billion-dollar brand.
Under her direction, Rhode last year became the No. 1 skincare brand in earned media value — or exposure through methods other than paid advertising — with 367% year-over-year growth.
Rhode is a solid match for E.l.f., which has seen growth skyrocket in recent years in large part to its digital prowess. The company has legions of online fans and is known for TikTok marketing that feels more natural to consumers.
The company is also looking to dig deeper into skincare, which has become more popular with all age groups, particularly E.l.f's younger, core consumer. In 2023, it acquired skincare brand Naturium for $355 million. Its acquisition of Rhode will allow it to build on its skincare growth and reach a higher income consumer.
"E.l.f. cosmetics is about $6.50 in its core entry price point, Rhode, on average, is in the high 20s, so I'd say it does bring us a different consumer set to the company overall, but the same approach in terms of how we engage and entertain them," said Amin.
E.l.f. made the announcement as it posted fiscal fourth quarter results, which beat Wall Street's expectations on the top and bottom lines.
Here's how the beauty retailer performed compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:
The company's reported net income for the three-month period that ended March 31 was $28.3 million, or 49 cents per share, compared with $14.5 million, or 25 cents per share, a year earlier. Sales rose to $332.7 million, up about 4% from $321.1 million.
E.l.f.'s sales have increased rapidly in recent years, but investors have grown concerned as that growth started to slow and the threat of tariffs began weighing on its business. The company sources about 75% of its products from China, which currently faces a 30% duty on exports to the U.S. Last week, it announced plans to raise prices by $1 to offset higher costs from tariffs.
While U.S. duties on Chinese imports are 30% now, that could change as President Donald Trump negotiates with Beijing. As a result, E.l.f. said it isn't providing a fiscal 2026 outlook "due to the wide range of potential outcomes related to tariffs."
Amin said E.l.f. paid more than 145% in duties before Trump agreed to slash the levies on Chinese goods, but those costs didn't come through during the quarter and will show up when the company reports its fiscal 2026 first-quarter earnings.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
30 minutes ago
- Yahoo
QVC Group details TikTok, social content plans
This story was originally published on Retail Dive. To receive daily news and insights, subscribe to our free daily Retail Dive newsletter. QVC Group hosted its first Super Brand Day on TikTop Shop earlier this month, building on its efforts to expand its reach and investments in social shopping. For eight hours on May 14, QVC Group streamed live content from creators and celebrities on TikTok resulting in its highest viewed and engaged company-hosted livestream to date, a QVC Group spokesperson said. QVC Group plans to expand its TikTok reach internationally, CEO David Rawlinson said during a recent earnings call. Next February, the company will partner with TikTok U.K. Minutes watched on QVC Group's social and streaming platforms grew 26% compared to last year, while streaming monthly active users grew 131%. March was the company's largest non-holiday revenue month. QVC Group said success in its streaming and social businesses is crucial. The company now streams 24/7 on TikTok and cited its most important metric as revenue growth in a recent earnings call. QVC Group estimates the percentage of revenue generated during Q1 through streaming and social platforms was in the mid- to high-single digits. Rawlinson said what's key to the company's social strategy is that it consists of a pre-aggregated audience. 'There are already tens of millions, in some cases, hundreds of millions of people, if not billions, on those platforms,' Rawlinson said on the call. 'And so you get to play in a very growing, large stream of potential customers who are increasingly used to seeing shopping content in their social feeds and who are increasingly converting over to purchases within their social experience. And so that's the magnitude of the opportunity.' Despite QVC Group's financial struggles, the company is going all in on social shopping investments. Among its various social commerce investments, QVC Group's latest targets Gen X. The 'Age of Possibility' platform celebrates women over age 50 with an expanded TikTok partnership and an eight-hour livestream shopping event. Beyond social, QVC Group is tapping into other ways it can broaden customer reach. Through a partnership with American Airlines, travelers can stream QVC+ and HSN+ channels on the airline's free in-flight entertainment platform. Sign in to access your portfolio
Miami Herald
an hour ago
- Miami Herald
Low-cost beauty brand to raise prices due to tariffs, inflation
For many consumers, cosmetics blur the line between a want and a need. Case in point: I want to wear lipstick. Do I need a dozen shades of pink and red lipstick? Well… yes. Wearing makeup - and having plenty of options in my makeup bag - makes me look and feel better, even if I'm just working from home. (Hey, I like to be prepared for video calls.) Judging by the global revenue in the beauty and personal care market - projected to be $677.19 billion in 2025, per Statista - I'm not alone in my "need" for a healthy stash of makeup and skincare products. Don't miss the move: Subscribe to TheStreet's free daily newsletter I'm also probably not alone in scaling back my beauty budget in the face of inflation. I've been averting my eyes from my inbox and text messages, which are loaded with promotions from my favorite brands. I've also been scoping out product dupes among traditionally lower-priced drugstore brands. Related: Struggling cosmetics brand sounds alarm, laying off thousands However, the recent announcement from a popular budget-friendly brand might mean it's time to refrain from drugstore "splurges," too. E.l.f. Cosmetics has forged a reputation as an affordable, yet high-quality makeup that's a hit with both drugstore and online consumers. But as inflation and tariffs loom, the company is raising its prices. The brand made the announcement last Friday on Instagram in true Gen Z speak. The caption reads: "Starting August 1, our prices are going up by $1.* Bringing you the best of beauty is getting more $$ but we're committed to keeping the quality high and prices We are keeping an on the tariff situation as it evolves." Now, $1 doesn't exactly sound like a wallet-buster. However, the percentage is the real eye-opener: a $2 product increasing to a $3 product represents a 50% increase. That's a big deal. The company says that even with the increase, 75% of its products will remain priced at $10 and below, like lip oil ($9), lip liner ($3), concealer ($8), and brow lift ($7). To be fair, you could fill up a makeup bag with all the basics and still have it cost less than, say, a tube of Chanel lipstick. But e.l.f. Cosmetics customers are not typically Chanel customers, and vice versa. It's the budget-minded consumers who will bear the brunt of the increase. And in light of other big E.l.f. news, some are not happy about it. Related: Kylie Cosmetics owner makes a harsh decision News of the price increase was overshadowed by even bigger news this week: E.l.f. acquired Hailey Bieber's Rhode in a $1 billion deal. On the Instagram post announcing the price increase, comments ranged from "We LOVE YOU" (@emuxly) to "I guess you need your customers to pay the 1 billion you spent on Rhode…" (@ Fair point. Premium brand users will still find E.l.f. products are cheap at twice or even three times the price, but those who rely on the budget brand as their beauty routine mainstay will take the hit. More Retail: Forget the Birkin bag, Hermès unveils something unexpectedCostco shares surprising pricing news as tariff pressures increaseStarbucks makes major change in rewards program loyal fans will hate The company attributes the price increase to the impact of tariffs and inflation. But a billion-dollar deal suggests that the company isn't exactly in economic danger. In fact, it indicates that E.l.f. is banking on a bright future with its Gen Z and now Gen Alpha customers. The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
San Francisco Chronicle
an hour ago
- San Francisco Chronicle
Oakland-based cosmetics company buys Hailey Bieber's Rhode brand for $1 billion
Oakland-based E.l.f. Beauty has purchased Hailey Bieber's skin care and makeup brand Rhode for $1 billion. Bieber, a model, entrepreneur and the wife of pop singer Justin Bieber, started the casual beauty brand in 2022. 'I always had big dreams for the company, and the most important thing to me is to keep bringing (Rhode) to more spaces, places, and faces globally,' the social media mogul wrote in an Instagram post Wednesday, May 28, while announcing the deal. 'I found a like-minded disruptor with a vision to be a different kind of company that believes in big ideas and innovation in the same way that I do and will help us continue to grow the brand.' Bieber will now step into a larger role at the company, serving as its chief creative officer and head of innovation, in addition to acting as a strategic adviser to the combined companies. The acquisition is made up of $800 million in cash and stock and an additional $200 million payout dependent on Rhode's growth and performance over the next three years. E.l.f., created in 2004, is headquartered on 10th Street in Downtown Oakland, and its purchase of Rhode marks the company's largest to date. The East Bay company previously acquired skin care brand Naturium in 2023 for $355 million. E.l.f. reportedly praised Rhode's 'powerful engagement model' during its earnings call following the announcement on Wednesday, according to CNN, with CEO Tarang Amin noting that 'One of the things we really like about Rhode is just how tight the product assortment is.' Bieber launched Rhode, which is her middle name, as a skin care line but has since expanded to include an array of makeup products including blushes, lip balms and lip liners. There are currently 10 products available. Rhode made $212 million in net sales in its last fiscal year, which ended in March, gaining popularity among younger consumers in particular. Previously only available online and during rare in-person pop-ups, the brand announced earlier this year that products would be hitting the shelves of Sephora in North America and the United Kingdom soon. News of the acquisition comes as her husband is rumored to be on the verge of 'financial collapse' after having to sell his music catalog in December 2022, according to a TMZ documentary, 'TMZ Investigates: What Happened to Justin Bieber?' Available on Hulu, the film alleges that Bieber's financial troubles began when he was plunged into debt for pulling out of his 'Justice' world tour in 2022.
