We are Target's #1 brand, we have over 20% of the category, says elf Beauty CEO Tarang Amin
elf Beauty Chairman and CEO Tarang Amin joins 'Mad Money' host Jim Cramer to talk quarterly results, the impact of tariffs, consumer trends and more.
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Yahoo
2 hours ago
- Yahoo
E.l.f. Beauty remains committed to manufacturing in China despite tariffs
Affordable cosmetics company e.l.f. Beauty (ELF) has long relied on China to keep its prices low and create value-oriented "dupes" of higher-end products. Now, President Trump's economic agenda is putting that model to the test. E.l.f. sources 75% of its products from China, making it highly exposed to higher costs from Trump's tariffs (though less so than in 2019, when the company sourced 100% of its products from the country). In addition to the broad-based tariffs Trump has levied in his second term, e.l.f. faces a 25% tariff on its China-sourced products that Trump levied in 2019. With the most recent 30% tariffs that Trump imposed on Chinese goods, which are undergoing legal scrutiny, e.l.f.'s product imports to the US were subject to tariffs at the 55% level. Unlike other companies that have vocally pivoted to American onshoring to avoid being singled out by the president, CEO Tarang Amin said on the company's earnings call that e.l.f. remains committed to its Chinese suppliers. "We believe our unique China-based supply chain is an area of competitive advantage we've been honing for the past 21 years," Amin said. "It underpins our value proposition, delivering the best combination of quality, cost, and speed in our industry. We're ... committed to our China team and suppliers." But tariffs create a challenging situation for a company that prides itself on its affordability factor. E.l.f. recently took a rare step in announcing a $1 price increase on all items starting in August. In an interview with Yahoo Finance on Thursday, e.l.f Beauty CFO Mandy Fields did not say whether e.l.f. would pare back prices if tariffs were to come off. "There's just such a range of outcomes from a tariff perspective," Fields said (see video above). "I would say pricing is one lever that we have in our toolkit, but we're also looking at our supply chain to optimize that, and also looking at business diversification as we think about tariff mitigation." The beauty company also announced the acquisition of Rhode, a direct-to-consumer skin care brand founded by Hailey Bieber, for $1 billion. One of the reasons given for the deal was to help e.l.f. diversify its supply chain away from China. E.l.f. Beauty stock soared 23% on Thursday following the announcement. Many beauty brands are going back to the drawing board in hopes of finding ways to deal with tariffs, starting by reaching out to their suppliers and finding new efficiencies. Alicia Yoon, the founder of Korean beauty brand Peach & Lily, also warned about the dangers of cost-cutting too much to offset duties. 'It's very tempting to say, 'OK, this ingredient, let's swap it out for something that's basically the same, or find a new supplier that's more affordable,'" Yoon told WWD at the 2025 Beauty CEO Summit, adding, "But that can impact quality.' In 2024, China shipped $671.4 million worth of makeup and skin care products to the United States. For the week ending May 10, incoming shipments to the Port of Los Angeles are expected to be roughly 36% lower than the previous year, largely due to ongoing trade disputes. Read more: What Trump's tariffs mean for the economy and your wallet Tariffs could be a huge issue for smaller cosmetic brands in particular, L'Oréal ( CEO Nicolas Hieronimus said during a sales update in April. In a nod to e.l.f., Hieronimus hinted that its inexpensive NYX Cosmetics brand was in a better position than its competitors, as it reduced its exposure to Chinese-imported products to around 20%, "which is not nothing, but it's only 20%," he said. "We know that some of our very direct competitors are closer to 80%," Hieronimus added. "So at some point ... [if] the tariffs against China are confirmed and stand, it will indeed benefit some of our brands — and makeup in particular." At the current China tariffs level, e.l.f. reported on Wednesday that it expects a $50 million annualized cost impact. The growing beauty company continued to gain market share in its fiscal fourth quarter and grew net sales by 28%. 'We believe we have the right strategy to drive continued category-leading sales and market share growth in the years to come, and believe the acquisition of Rhode will further strengthen and diversify our portfolio of fast-growing disruptive brands,' e.l.f. CEO Amin said. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
5 hours ago
- Yahoo
Hailey Bieber Is a Great Entrepreneur. She Did Not Make $1 Billion This Week.
When model Hailey Bieber was on the cover of Allure introducing her soon-to-launch skin-care line called Rhode, she told us that her biggest hope for the brand was that someone might pick it up and not know it's hers: 'That would be my dream, for it to actually surprise people.' And what a surprise we all got this week when Bieber announced she'd sold her brand to E.L.F. Beauty only three years later. Even more unexpected than this accelerated time frame, though, was the amount she sold it for, according to Wednesday's press release: $1 billion. Later that afternoon, we weren't surprised to see news headlines and user-generated TikTok videos swirling, mostly jumping on that B-word: Many said that Hailey Bieber sold Rhode for a billion bucks, or that she was set to earn a billion dollars from the sale of the brand. Several outlets went so far as to declare that Bieber is a billionaire now, implying that the announcement of this deal triggered a direct deposit of a 10-digit figure into her checking account. In the headline for our interview with Bieber this week, we referred to the value of the deal as being 'more money than we could ever dream of.' Definitely accurate! In a video posted to our social media accounts, our content director, Kara McGrath, stated the brand was sold for 'more than half a billion.' Also accurate! Yet commenters were quick to respond, telling us we got the number wrong. But there's a reason we didn't say this is a full-on, billion-dollar acquisition (at least not yet). After we looked at the transactional details laid out in the press release, we realized we wouldn't be 100% comfortable in stating that Bieber had sold Rhode for $1 billion. It describes the deal as being 'comprised of $800 million of consideration payable at closing [the second quarter of fiscal 2026] in a combination of cash and stock, subject to customary adjustments, and an additional potential earnout consideration of $200 million based on the future growth of the brand over a three-year time frame.' Since $200 million of that $1 billion is hypothetical, we paused before putting '$1 billion' in our headlines and social content. And that $800 million figure itself, as stated in the release, is a combination of '$600 million of cash and $200 million, or approximately 2.6 million shares, of newly issued shares of E.L.F. Beauty common stock issued to existing equity holders of Rhode, subject to certain customary purchase price adjustments.' So, as fun as it is to imagine, the CEO of E.L.F. didn't show up at Bieber's office with a suitcase full of cash. And in general, the deal, though very lucrative for Bieber, won't make the automatic impact on her wallet that some people seem to think it will. Even if, in the end, the deal nets out to a billion dollars (or more with soaring E.L.F. stock), this does not make Bieber a billionaire. She is one of the many people who work for (or invested in) Rhode who will be getting a payout. Regardless of precisely how much this young phenom of a brand ultimately sells for, it's a brilliant move for both Rhode and E.L.F. Rhode makes great products (two of them have won Best of Beauty Awards) beloved by consumers, and Bieber has been able to infuse the brand with a cool factor that many companies have tried and failed to replicate. It's a cool that has translated to spectacular sales numbers, as we learned this week: $212 million in net sales (Whoa!) over the last 12 months—and that's with less than a dozen products and only direct-to-consumer distribution (the brand is entering Sephora this fall). Meanwhile, E.L.F. clearly has a ton of cash, which they can now use to supercharge those already impressive sales and to have Hailey and her serious beauty influence on their team. So does the ultimate, definitive, exact number really matter when, at the end of the day, Bieber and her partners are still bringing in amounts of money most of us will never see in a lifetime? Maybe not. But at Allure, we're committed to choosing our words clearly and carefully—whether we're covering a financial transaction or skin-care terminology or sustainable packaging claims. More beauty news: Thank You, And Just Like That… For Rebuking Middle-Age Hair Clichés Kris Jenner's New Face Is a Great Case for Keeping Plastic Surgery Old School TikTokers Are Saying This Dior Lip Oil 'Turned Their Lips Black' And wow, Hailey Bieber's 10 beauty commandments: Follow Allure on Instagram and TikTok, or subscribe to our newsletter to stay up to date on all things beauty. Originally Appeared on Allure Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
a day ago
- Forbes
E.L.F. Continues To Disrupt The Beauty Business By Acquiring Hailey Bieber's Rhode For $1 Billion
Ever since E.l.f. Beauty came on the scene, it's been in the business of disrupting the beauty industry. 'We were founded in 2004 and have sought to disrupt the traditional beauty model of high prices, long product cycles and traditional advertising,' it stated in its first annual report after going public in 2016. True to its word, it has been remarkably successful, ranking as the number one cosmetics brand in the U.S. in unit sales and number two in dollar share, according to Nielsen. Yet there's no shame in being number two in dollar share since its average unit price is well under that of other cosmetics brands and is likely to remain so even after an across-the-board $1 price increase takes effect in August. Afterwards, 75% of its products will remain under $10. Now E.l.f. has done it again. It's acquired Hailey Bieber's phenomenally successful Rhode brand for $800 million – $600 million in cash and $200 million in stock – payable at closing, expected in the second quarter, with the potential for an additional $200 million payout on the future growth of the brand over the next three years, for a total $1 billion. 'e.l.f. Beauty found a like-minded disruptor in rhode,' e.l.f. chairman and CEO Tarang Amin said in a statement. 'rhode further diversifies our portfolio with a fast-growing brand that makes the best of prestige accessible. We are excited by rhode's ability to break beauty barriers, fully aligning with e.l.f. Beauty's vision to create a different kind of company. rhode is a beautiful brand that we believe is ready for rocketship growth.' This is a hugely big deal for E.l.f., being only its third acquisition since acquiring clean-beauty brand W3ll People, now marketed as Well People, for $27 million in 2020 and skincare brand Naturium for $355 million in 2023. It's also big by recent industry standards, although there have been a few bigger. In 2023, L'Oréal paid $2.5 billion for Aesop – its largest acquisition at the time. But Aesop came with nearly 400 stores, unlike Rhode, which grew to $212 million in sales exclusively via e-commerce and occasional pop-up shops. However, it will launch in Sephora later this year. Also in 2023, Estée Lauder paid $2.8 billion for the Tom Ford brand, but it also included a fashion business, handled by partner Ermenegildo Zegna, and eyewear, now managed by Marcolin. Last year, Estée Lauder followed by completing the $1.7 billion acquisition of Deciem with its flagship The Ordinary skincare brand. However, it has been partnering with Deciem since 2017 after making an initial investment in the brand. Yet the $1 billion price tag for Rhode is a stretch for a brand that has only been in business for three years with a limited ten product range with prices starting at $18 for lip tint to $32 for its signature 'glazing milk,' well above E.l.f. comfort zone. The closest comparable is the $600 million Coty paid for a 51% stake in Kylie Jenner's Kylie Cosmetics with a total $1.2 valuation, but according to Forbes, that partnership has been rocky. In his Substack 'Making Cents' newsletter, Drew Fallon, former CFO of Mad Rabbit and CEO of Iris Finance, wrote, 'For me, the biggest takeaway is honestly the 3 years thing. I can't get over that, it's insane. Combine this with the fact that Rhode's products are innovative (i.e., potentially not durable) and I think this move is ALMOST desperate by E.L.F.' TD Cowen's Oliver Chen shares that concern. 'The main question with the Rhode acquisition is whether the brand has longevity beyond its celebrity hype.' There's no question that Bieber has capitalized on her celebrity status – she's the daughter of actor Stephen Baldwin and married to singer-songwriter and pop-icon Justin Bieber – but Rhode's success goes far beyond that. 'She is a celebrity, but what drove the valuation so high was the authenticity, the community building – 11 million followers on Instagram – and the very methodic and deliberate approach to product development,' shared Dr. Brent Ridge, who with business partner and husband Josh Kilmer-Purcell founded Beekman 1802 goat milk skincare brand. Ridge a great admirer of what E.l.f. and what Bieber and her Rhode team have accomplished. In fact, Beekman 1802 has followed much the same path, what he and Kilmer-Purcell call the principles of 'G.O.A.T. Wisdom,' which they've detailed in a book of the same name. The methodical, deliberate approach to product development that Ridge talks of – and that can also be called disruptive – is exemplified by signature Rhode products. Bieber coined the term 'glazed donut skin' to describe healthy, dewy and glossy skin. Rhode delivers the means to achieve it in a four-step skincare kit. And what Bieber started has turned into a glazed donut skin trend that has inspired many other brands, including E.l.f., which launched 'Donut Forget Putty Primer' in partnership with Dunkin' donuts. Extending beyond beauty, Bieber combined the award-winning Rhode Peptide Lip Tint with a iPhone cell phone case to carry these two everyday essentials everywhere. And Rhode tied the glazed donut skin trend with Peptide Lip Tint in collaboration with Krispy Kreme in a limited edition 'Strawberry Glazed Donut' colored and flavored tint. 'What gave us the conviction for a billion-dollar deal is Hailey and Rhode's track record and what they've been able to build and achieve with such a level of conviction and depth with their community and in the market,' E.l.f.'s Amin said to Vogue Business. 'But the thing that made us interested is that she is a fellow disruptor and that gives me a lot of confidence when I'm looking at a long-term M&A environment.' This deal comes at a pivotal time for E.l.f. Its revenues have grown from $230 million in 2016 – about where Rhode is today – to $1.3 billion in fiscal 2025. Most notably, E.l.f. more than doubled sales over the last two years – 2023 revenue reached $579 million. And it nearly doubled net income over the same period, from $62 million to $112 million this year. However, growth slowed significantly in the most recent fourth quarter, ending Mar. 31. Revenues rose a mere 4% over same period previous year, not bad relative to others in the industry, but way below recent levels. It averaged 56% quarterly growth since 2023 and it hasn't been so slow since 2019. Clearly, the Rhode acquisition will give a boost to E.l.f's growth in the coming quarters as E.l.f.'s dynamic product development engine is expected to help Rhode expand its product range, all the while maintaining its core brand DNA. Bieber will stay as the brand's chief creative officer and head of innovation, as well as act as a strategic advisor to Amin and the combined companies. E.l.f. has another celebrity-founded brand, Keys Soulcare with Alicia Keys. Rhode CEO Nick Vlahos, previously CEO of The Honest Company and prior to that with Clorox and Burt's Bees, will remain with the brand along with co-founders Michael and Lauren Ratner. Michael serves as co-executive chair of Rhode's board and Lauren is President and chief brand officer. 'We can't wait to bring rhode 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,' Bieber said in a statement. Coming from his G.O.A.T. Wisdom perspective, Dr. Ridge sees the E.l.f.-Rhode partnership as a match made in heaven, 'marrying a business powerhouse that has mastered disruptive marketing and product-market fit with a brand that has successfully de-centered its celebrity founder while still managing to capitalize on her for key moments.' 'Making Cents' Fallon is more reserved. 'In short, this HAS to work. They just bet the company on it. If this is another Kylie Cosmetics moment, E.L.F. will be the next Coty, a stock chart that doesn't look very fun.' See also:
