E.l.f. Beauty has made headlines this week, announcing its ambitious plan to acquire Hailey Bieber’s burgeoning beauty brand, Rhode, in a staggering deal worth up to $1 billion. This acquisition signals E.l.f.’s strategic move to expand its footprint in the skincare market, setting the stage for a significant evolution in beauty retail.
The deal encompasses $800 million in cash and stock, with an additional potential $200 million payout contingent on Rhode’s performance over the next three years. As E.l.f. prepares to finalize the acquisition, anticipated to close in the second quarter of fiscal 2026, industry experts are closely monitoring this significant development in the beauty sector.
CEO Tarang Amin expressed his awe at the rapid trajectory of Rhode, which generated $212 million in net sales in just under three years, driven solely through direct-to-consumer channels with a modest product lineup of just ten items. “I didn’t think that was possible,” Amin stated in an interview with CNBC. This level of disruption and success truly captured E.l.f.’s attention.
For Hailey Bieber, the partnership with E.l.f. represents a pivotal step in her brand’s journey. In her words, “From day one, my vision for Rhode has been to make essential skincare and hybrid makeup you can use every day.” She anticipates that this collaboration will enable her brand to reach a broader audience, allowing for innovative product launches and expanded global distribution.
However, the announcement wasn’t without its challenges. E.l.f. shares fell by approximately 10% in after-hours trading following the news, even though the company’s fiscal fourth-quarter results exceeded Wall Street expectations. E.l.f. achieved an impressive $333 million in revenue, topping estimates of $328 million, while also reporting strong earnings per share of 78 cents, surpassing the anticipated 72 cents.
Despite these positive indicators, E.l.f. did not provide future guidance, which many analysts chalk up to uncertainties stemming from changing tariff policies impacting their considerable manufacturing base in China. The company currently sources about 75% of its products from the country, which now faces a 30% duty on exports to the U.S. This led E.l.f. to announce a planned price increase of $1 to counteract escalating costs.
In terms of growth, Rhode stands out as a remarkable performer, having doubled its customer base in just one year. With plans to launch in Sephora stores across North America and the U.K. later this year, Rhode is poised to evolve beyond its direct-to-consumer roots, aiming to capture a larger segment of beauty shoppers.
Bieber will continue to play an influential role in the brand’s trajectory, serving as Rhode’s chief creative officer. She will oversee creative direction, product innovation, and marketing initiatives, ensuring that the brand remains aligned with her overarching vision. Remarkably, under her leadership, Rhode emerged as the number one skincare brand in terms of earned media value last year, experiencing a phenomenal 367% year-over-year growth.
For E.l.f., this acquisition marks a strategic alignment with its core mission of affordability and accessibility in beauty. Traditionally known for its budget-friendly cosmetics priced at around $6.50, adding Rhode to its portfolio will allow E.l.f. to appeal to a different consumer demographic. The average price point for Rhode’s offerings hovers in the high twenties, diversifying E.l.f.’s consumer base while maintaining a consistent engagement strategy that resonates with their younger audience.
Moreover, E.l.f. has been on an acquisition spree, having previously purchased skincare brand Naturium for $355 million. These strategic moves indicate a concerted effort to penetrate deeper into the skincare segment, which continues to enjoy rising popularity across various age groups, particularly among younger consumers.
It’s noteworthy that while E.l.f.’s recent financial performance and acquisition strategy present a compelling narrative, the company also faces challenges. Investors have expressed concerns about potential growth slowdowns and the looming threat of tariffs impacting profit margins. As a retail brand deeply intertwined with digital engagement, E.l.f. has successfully leveraged platforms like TikTok to connect with consumers in a more organic, relatable manner, which may bode well for its future outcomes.
As this merger progresses, beauty enthusiasts and industry watchers are keen to see how E.l.f. will integrate Rhode into its expansive lineup and how they will navigate the complexities of a changing economic landscape. With Hailey Bieber’s star power and E.l.f.’s business acumen, the partnership holds significant potential to reshape the beauty landscape in ways we have yet to imagine. The impending collaboration is not just an acquisition; it signifies a new chapter in the evolving narrative of beauty, where accessibility, innovation, and celebrity influence converge to create something truly unique.
As we await the execution of this bold acquisition, it’s clear that E.l.f. and Rhode have the potential to redefine what it means to be a leader in the beauty industry. The partnership could elevate both brands—uniting E.l.f.’s commitment to affordability with Rhode’s passion for high-quality skincare and makeup. The journey ahead is promising, and consumers will undoubtedly be following every step of the way as these brands innovate and transform the beauty landscape together.
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