Hailey Bieber Sells Rhode Beauty To e.l.f. For $1 Billion

In today’s beauty market, where brands rise and fall quickly, a new deal is shaking things up. Big players are acquiring smaller, fast-growing names to reach younger audiences and expand their global reach. One recent headline grabber is e.l.f. Beauty, a budget-friendly makeup giant, which is making a major move to grow its portfolio, involving Hailey Bieber’s beauty brand, Rhode.

On Wednesday, e.l.f. announced it was buying Rhode for a whopping $1 billion. This is by far the biggest acquisition the company has made, dwarfing last year’s $355 million purchase of skincare brand Naturium.

The deal signals how serious e.l.f. is about strengthening its position in the skincare and cosmetics space, especially among younger customers. Rhode is a relatively new brand, founded in 2022 by Hailey Bieber along with Michael and Lauren Ratner. Despite its short history, it has made impressive strides.

In its last fiscal year, which ended in March, the company reported net sales of $212 million. Earlier this year, Rhode also announced it would be expanding its presence in physical stores, with products appearing in Sephora locations across North America and the UK. This move signals a shift from online-only to more traditional retail, which could help grow the brand further.

Hailey Bieber stays on as Rhode’s creative lead, bringing strong influence and a loyal fan base.

Hailey Bieber will continue to play a significant role in the company, remaining as Rhode’s chief creative officer and head of innovation. She’s not only the founder but also the creative director, deeply involved in shaping the brand’s image and products.

Given her strong social media presence, both from before and after marrying singer Justin Bieber, she brings a powerful platform to the table. E.l.f. highlighted this in its earnings call right after the acquisition announcement.

The company praised Rhode’s “powerful engagement model,” pointing out how fans will line up for hours at Rhode pop-up events and how its products often sell out online. That kind of loyal following is a significant asset.

One standout feature of Rhode’s approach is how focused its product lineup is.

“One of the things we really like about rhode is just how tight the product assortment is,” said e.l.f. CEO Tarang Amin during the call. “It’s only 10 products across skincare, color cosmetics, and accessories.”

This curated selection helps keep the brand manageable and creates strong demand for each product. E.l.f. itself is already a major player in skincare and makeup, especially popular with younger consumers.

According to a survey by investment firm Piper Sandler, e.l.f. is the top cosmetic brand among teens. With the Rhode acquisition, e.l.f. expects to boost Rhode’s retail presence and expand internationally.

Market Trends and Brand Strategy

Dr. Kelly McGonigal, a health psychologist, emphasizes that acquiring innovative brands like Rhode can significantly enhance e.l.f.'s market position. She notes that today's consumers, especially Gen Z, prioritize authenticity and brand values over price alone.

In her experience, brands that align with consumer identity and social values see higher engagement rates. This acquisition strategy not only adds revenue but can also foster loyalty among younger audiences who resonate with Hailey Bieber's image and ethos.

E.l.f. is raising prices due to a 55% cost hike from China tariffs.

However, this significant purchase comes at a tricky time. E.l.f. is navigating the fallout from the ongoing tariff battle between the U.S. and China under former President Donald Trump. About 75% of e.l.f.’s global production is based in China, and tariffs have pushed up costs by 55%, including tariffs imposed back in 2019.

These additional costs are a serious challenge for a company known for its affordable prices. In response, e.l.f. announced it will raise prices by $1 across its entire product line starting August 1. Most of its products are still priced under $10, but the increase is a clear sign of pressure from the tariffs.

Rhode

The uncertainty around tariffs has made e.l.f. cautious. The company did not provide guidance for this fiscal year, pointing to the unpredictability of the trade situation. Still, it remains committed to its production strategy.

“We believe our unique China-based supply chain is an area of competitive advantage we’ve been honing for the past 21 years,” the company said in the earnings call. “We are committed to our China team and suppliers.”

As for the Rhode deal itself, e.l.f. will pay $800 million in cash and stock upfront, with up to an additional $200 million possible based on Rhode’s performance over the next three years. The deal is expected to close later this year.

This acquisition shows how e.l.f. is doubling down on appealing to young, engaged consumers while navigating larger global trade challenges. Meanwhile, Rhode gains the resources and reach of a major player, setting the stage for faster growth.

Together, the two brands aim to carve out a bigger slice of the beauty market at a time when consumers are more selective and savvy than ever.

This acquisition reflects a broader trend in the beauty industry where larger companies seek to integrate niche brands to appeal to younger demographics. Social media marketing expert, Neil Patel, suggests that brands like e.l.f. should leverage Rhode's existing online presence to maximize visibility.

He advises creating co-branded campaigns that engage influencers and encourage user-generated content. This approach not only boosts brand recognition but also cultivates a community around the products, enhancing customer loyalty and driving sales.

Solutions & Coping Strategies

The acquisition of Rhode Beauty by e.l.f. marks a pivotal moment in the beauty industry, where aligning with contemporary consumer values is crucial. Experts suggest that brands must remain agile and responsive to market trends to thrive amidst rapid changes.

By embracing innovative marketing strategies and prioritizing authentic engagement, e.l.f. can not only expand its product offerings but also strengthen its relationship with younger consumers. Ultimately, building trust and connection within the community will be essential for long-term success.