Elf Beauty announced in its plan announced Wednesday that the acquisition of Hailey Bieber’s beauty brand Rhode is worth up to $1 billion as cosmetics companies hope to further expand into skin care.
According to FACTSET, the acquisition is the largest ever, consisting of $800 million in cash and stock, and an additional $200 million payment based on Rhode's performance over the next three years. The transaction is expected to be completed in the company's fiscal year 2026 or later this year.
“I’ve been in the consumer space for 34 years and over time I’ve been shocked by the brand. In less than three years, their net sales have increased from zero to $212 million, directly to consumers, with only 10 products. I don’t think it’s possible. I think it’s impossible.” “So, this interference has certainly caught our attention.”
Bieber said in a press release that she is happy to work with the elves to bring her brand to “more faces, places and spaces.”
“My vision for Rhodes has allowed you to use essential skin care and blended makeup every day,” Bieber said. “This journey is just three years old and our partnership with Elf Beauty marks an incredible opportunity to enhance and accelerate our ability to attract more communities through more innovative products and expand our distribution globally.”
Launched in 2022, Rhode has more than doubled its customer base over the past year and generated $212 million in revenue in the 12 months ended March 31. The company's growth is primarily through its website, but is scheduled to launch in Sephora stores in North America and the UK by the end of the year.
As part of the acquisition, Bieber will serve as Chief Creative Officer and Head of Innovation for Rhode, overseeing creativity, product innovation and marketing. The brand was launched with two co-founders Michael and Lauren Ratner, but Bieber’s influence and name turned it into a billion-dollar brand.
Under her guidance, Rhode became the No. 1 skincare brand to gain media value last year, or through other methods other than paid advertising, up 367% year-on-year.
Rhode is a solid match for the elves, and its digital capabilities have soared dramatically in recent years. The company has a large number of online followers and is known for Tiktok marketing, which is more natural to consumers.
The company also hopes to delve into skincare products, which are becoming increasingly popular among core consumers of all ages, especially the Elf. In 2023, it acquired skincare brand Naturium for $355 million. Its acquisition of Rhode will allow it to build on skin care growth and earn higher income consumers.
"The core entrance value of Elf Cosmetics is about $6.50, and Rhode is on average in the 20s, so I said that it does bring us a different consumer overall, but the same approach in terms of how we engage and entertain," Amin said.
Elf made the announcement as it released its fourth-quarter results, which beat Wall Street’s expectations at the top and bottom line.
According to an LSEG survey of analysts, beauty retailers' performance compared to Wall Street expectations.
The company reported net income for the three months ended March 31 at $28.3 million, or 49 cents per share, compared with a year ago, $14.5 million, or 25 cents per share. Sales rose to $332.7 million, up about 4% from $321.1 million.
Sales of the Elf have increased rapidly in recent years, but as growth began to slow down, the threat of tariffs began to pressure its business, and investors' sales volumes grew. The company, which had 75% of its products from Chinese products that currently faced a 30% export tax on the U.S. last week, announced plans to raise prices by $1 to offset the higher costs of tariffs.
Although the U.S. has a 30% responsibility for Chinese imports now, things may change as President Donald Trump negotiates with Beijing. As a result, the Elf said it did not provide a fiscal year 2026 outlook “due to the wide range of potential outcomes related to tariffs.”
Amin said the elves paid more than 145% of their duties before Trump agreed to cut taxes on Chinese goods, but those fees were not paid in the quarter and will appear when the company reported its first-quarter earnings for fiscal 2026.
ELF stock fell more than 13% in expansion trading on Wednesday.