In a landmark deal for the cosmetics industry, E.l.f. Beauty has announced plans to acquire Hailey Bieber’s skincare brand, Rhode, in a transaction valued at up to $1 billion. The deal represents E.l.f.’s biggest acquisition to date and signifies the company’s strategic move to strengthen its foothold in the booming skincare market.
Deal Details
The acquisition comprises $800 million in cash and stock, along with an additional potential $200 million earnout based on Rhode’s performance over the next three years. The deal is expected to close in the second quarter of E.l.f.’s fiscal year 2026, or later this calendar year.
According to E.l.f. CEO Tarang Amin, Rhode’s meteoric rise and brand influence were key factors behind the acquisition. “In less than three years, they’ve gone from zero to $212 million in net sales, direct-to-consumer only, with only 10 products.
A Strategic Expansion into Skincare
The acquisition aligns with E.l.f. Beauty ongoing efforts to expand beyond affordable cosmetics into premium skincare. Rhode, launched in 2022 by model and entrepreneur Hailey Bieber, has already made a significant impact with its minimalist product line and loyal online following.
Rhode is direct-to-consumer and has more than doubled its customer base over the past year. In the 12 months ending March 31, the brand generated $212 million in revenue, a notable feat for a brand with only 10 products. The company is now preparing to launch in Sephora stores across North America and the U.K., marking its first step into physical retail.
Bieber’s Continued Role in the Brand
As part of the deal, Hailey Bieber will remain involved in the company, serving as Chief Creative Officer and Head of Innovation. She will continue to oversee product innovation, creative direction, and marketing. In a statement, Bieber said:
“From day one, my vision for Rhode has been to make essential skincare and hybrid makeup you can use every day. 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.”
A Match Made in Beauty
The acquisition is seen as a natural fit. While E.l.f. is known for its value-priced cosmetics, typically around $6.50, Rhode targets a higher-income demographic, with average product prices in the $20-$30 range. This allows E.l.f. to diversify its consumer base and expand into the premium skincare market while leveraging its expertise in digital marketing and DTC operations.
Under Bieber’s leadership, Rhode became the No. 1 skincare brand in earned media value in 2023, with a 367% year-over-year growth. This made the brand especially attractive to E.l.f., which has gained recognition for its successful TikTok campaigns and strong digital presence.
Tariffs and Financial Considerations
Despite the promising synergy between the two brands, the timing of the deal is not without challenges. E.l.f. will fund $600 million of the acquisition through debt, entering a period of high interest rates and uncertain U.S.-China trade relations. With 75% of E.l.f.’s products sourced from China, the company is particularly vulnerable to rising tariff costs, currently at 30% under the Trump administration.
Due to the volatility around tariffs, E.l.f. has chosen not to issue financial guidance for fiscal 2026. CEO Amin noted that increased costs from duties will become more apparent in the next quarter.
To offset the impact of tariffs, E.l.f. plans to implement a $1 price increase on many of its products starting August 1.
Financial Performance
E.l.f. announced the acquisition alongside its fiscal Q4 earnings report, which exceeded Wall Street expectations:
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Earnings per share: 78 cents adjusted vs. 72 cents expected
Revenue: $333 million vs. $328 million expected
Net income for the quarter ending March 31 was $28.3 million, up from $14.5 million a year earlier. Quarterly revenue rose by about 4% to $332.7 million.
Despite the strong results, E.l.f.’s stock dipped by about 4% in after-hours trading, largely due to concerns over the acquisition’s cost and looming tariff impacts.
Conclusion
E.l.f. Beauty acquisition of Hailey Bieber’s Rhode marks a pivotal moment for the beauty industry. It represents both a calculated bet on luxury skincare and a bold expansion strategy for E.l.f., a brand traditionally known for affordable makeup. As Rhode prepares to enter brick-and-mortar retail and expand globally, the partnership could redefine E.l.f.’s position in the beauty market—if consumers continue spending on skincare amid economic uncertainty.
