On Wednesday, beauty brand rhode, founded by Hailey Bieber, was sold to the cosmetics giant e.l.f. Beauty in a landmark deal valued at $1 billion. This acquisition marks a significant milestone for e.l.f., being its largest, surpassing its previous acquisition of the skincare brand Naturium for $355 million in 2023. The strategic move signals e.l.f.’s expansion strategy and its commitment to enhancing its portfolio in the competitive beauty marketplace.
Rhode, launched in 2022 in collaboration with Michael and Lauren Ratner, has quickly gained traction, generating net sales of $212 million in its most recent fiscal year, which concluded in March. Earlier this year, rhode made headlines by announcing its products would be available at Sephora locations across North America and the United Kingdom, contributing to its growing presence in the beauty industry. The brand, known for its distinct product lineup, has become a favorite among consumers, particularly young adults, thanks to its engaging marketing strategies and strong social media presence.
Following the acquisition, Hailey Bieber will continue to play a pivotal role in rhode’s operations as the chief creative officer and head of innovation. As the brand’s founder and creative director, her vision will remain central to its ongoing development. The decision to maintain Bieber’s involvement is indicative of e.l.f.’s intention to preserve the brand’s identity while tapping into her star power to fuel further growth.
One of the remarkable aspects of rhode noted by e.l.f. executives is the brand’s concise product assortment. According to CEO Tarang Amin, rhode offers a tightly curated selection of only ten products across skincare, cosmetics, and accessories. This tight product line not only simplifies the consumer decision-making process but also reinforces the brand’s positioning as focused and quality-driven.
In the marketplace, e.l.f. stands out as a leading force in both skincare and makeup sectors, especially appealing to younger demographics. Data from investment firm Piper Sandler indicates that e.l.f. is the top cosmetic brand among teenagers, underscoring its connection with this influential consumer group. With the acquisition of rhode, e.l.f. aims to enhance the brand’s reach in retail environments and strengthen its global presence, leveraging its existing expertise in the beauty sector.
However, this strategic acquisition comes at a significant time. E.l.f. is navigating challenges related to the economic fallout from President Donald Trump’s tariffs on imports from China. As of mid-May, approximately 75% of e.l.f.’s global production came from China, a situation now complicated by tariffs that have increased to 55%. In light of these tariffs, e.l.f. announced plans to raise prices across its entire portfolio by $1 starting August 1, a move aimed at maintaining profitability in a challenging economic climate.
Despite uncertainties related to tariffs and production costs, e.l.f. has opted not to provide guidance for the current fiscal year, reflecting the volatility of the current market conditions. Yet, the company remains steadfast in its belief in the competitive advantages afforded by its China-based supply chain developed over 21 years. This commitment suggests that e.l.f. intends to uphold its business model while also adapting to the surrounding economic pressures.
The rhode acquisition consists of $800 million in cash and stock, with the potential for an additional $200 million contingent on rhode’s performance over the forthcoming three years. This financial structure not only reflects the potential seen in rhode but also serves as an investment in the future of beauty products tailored for a new generation. The acquisition is expected to be finalized later this year, setting the stage for what promises to be an exciting chapter for both e.l.f. and rhode in the global beauty industry.