Elf Beauty, a giant of low-cost makeup, announced last Wednesday the acquisition of Rhode, a beauty brand founded by model Hailey Bieber, for $ 1 billion-the largest purchase of its history. The deal includes $ 800 million in cash and stocks, with the possibility of another US $ 200 million linked to brand performance over the next three years. The closure is scheduled for this year, according to information from CNN.
Created in 2022 by Bieber alongside Michael D. and Lauren Ratner, Rhode recorded $ 212 million in net sales in the last fiscal year, ended in March. With only 10 products in the portfolio – which includes skin care items, makeup and accessories – the brand stands out for its strong digital appeal and engagement on social networks, where Hailey has great presence since before her marriage to Justin Bieber. On Instagram alone, the model has 55 million followers.
According to CNN, the ELF described the Rhode model as “powerful”, citing frequent queues and depletions of the products. Hailey Bieber will remain involved as the brand’s director of creation and innovation, a position she is currently occupying. In January, Rhode announced its entry into Sephora in North America and the United Kingdom.
The ELF, which dominates the beauty segment among young public, sees the acquisition as an opportunity to expand the presence of Rhode in retail and international markets. Its global unit was the fastest growing last year, up 60%, according to CEO Tarang Amin.
Despite the expansion, the company faces challenges. About 75% of ELF’s production comes from China and is now subject to 55% tariffs as part of the trade war with China started by former President Donald Trump. To mitigate the impacts, ELF has announced that it will increase prices by $ 1 from August 1 and did not disclose projections for this fiscal year due to uncertainty about tariffs.
Still, the company reaffirms its commitment to the Chinese production chain, which has been developed for over two decades. “We believe our supply chain in China is a competitive advantage,” said Amin. In the last fiscal year, even with external pressures, the ELF saw its sales grow 28%.
