E.l.f announced Wednesday it will acquire Hailey Bieber’s Rhode for $1 billion, in a blockbuster deal that brings Gen-Z’s buzziest brand into the fold of the industry’s most disruptive conglomerate.
Since it was founded in 2022, Rhode has quickly become the darling of the global beauty market, celebrated for its high-tech yet accessible skincare formulas and its aspirational creative. In its latest fiscal year ending in March, the brand generated $212 million in net sales from just 10 products, including hits like its Pocket Blush and Glazing Milk essence. This month, Rhode announced it will launch in all Sephora US and Canada stores in the fall, and in Sephora UK by the end of the year.
E.l.f., meanwhile, has grown rapidly for the better part of a decade, thanks to its reputation for high-quality products at ultra-affordable prices. While E.l.f. was originally known as a “dupe” brand when it launched in 2004, it has surprised many in the industry by rolling out a steady stream of innovative new products, at a speed to market and price point few rivals have been able to match. Sales have grown for 25 consecutive quarters.
That charmed run is showing some signs of wear, however. On Wednesday, the company reported sales of $1.3 billion for the fiscal 2025 year, up 28 percent — the fastest pace of any large beauty company, but a far cry from the more than 77 percent increase it logged in fiscal 2024. In its fourth quarter, sales rose just 4 percent from a year earlier. Adjusted earnings before interest, taxes, depreciation and amortisation increased 26 percent.
In an interview with The Business of Beauty, E.l.f. chairman and chief executive Tarang Amin said the two brands recognised the “power” of joining forces.
“What we saw in Rhode was another like-minded disruptor,” he said. “I see Hailey as much more than a celebrity, she is one of the most thoughtful founders I’ve ever met. She has incredible instinct, a beautiful aesthetic that’s absolutely resonating with her community.”
Amin called that community “fervent” and cited the response to the brand’s recent Los Angeles pop-up, which saw some customers camped out overnight in line to attend, as proof that shoppers aren’t just buying Rhode products but into the growing lifestyle brand.
Bieber will continue in her capacity as Rhode co-founder, chief brand officer and head of innovation, as well as act as a strategic advisor for E.l.f. The remaining Rhode team, including co-founders Lauren and Michael D. Ratner and CEO Nick Vlahos, previously of The Honest Company, will join E.l.f. Beauty. Under the terms of the agreement, E.l.f. has agreed to pay $800 million for the brand — $600 million cash and $200 million in shares — with a potential $200 million earnout based on the brand’s growth over the next three years.
“From day one, my vision for Rhode has been to make essential skin care and hybrid makeup you can use every day,” Bieber said in a statement. “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.”
The Rhode to E.l.f.
Amin said that E.l.f. and Rhode approached one another, and had been in discussions since the fall. (Vlahos and Amin formerly worked together at Clorox.)
“She could have easily gotten more money from private equity or someone else, but she cares about building this brand for the long term,” Amin said.
Rhode’s success has come even as the celebrity beauty boom has faded. Brands like Ariana Grande’s R.E.M. Beauty have faced headwinds. As the number of labels fronted by famous faces has grown, consumers have become increasingly sceptical, seeing many celebrities and influencers as lacking authority or an authentic interest in beauty.
Bieber, for her part, has long been a beauty lover and worked with lines like Bareminerals well before her launch of Rhode. She also regularly promotes other lines, including giving a callout to indie line Ami Colé’s mascara for her recent Vogue cover alongside her cult Peptide Lip Treatments.
She is also a savvy marketer, popularising beauty trends like “latte makeup” and “donut glazed skin” well before she could attach products to social virality. Products do remain a draw, despite the glut of similar offerings. (Rhode’s lip treatments, though not a first-of-its-kind product, reportedly surpass direct sales of others like Summer Friday’s Lip Butter Balm.) Adjacent merchandise like Rhode’s lip gloss-toting phone case cause a frenzy, thanks to Bieber’s natural cultural cachet.
The deal also breaks an M&A logjam in the beauty market. For the better part of year, cosmetic lines like Kosas, Makeup by Mario, One/Size and even Selena Gomez’s Rare Beauty have been struggling to find buyers. Some would-be acquirers like the Estée Lauder Companies and Shiseido have little cash to spare, while private-equity firms are sceptical that buzzy brands can maintain their momentum as the beauty category enters a downturn.
Along with L’Oréal and Puig, E.l.f. has remained in the hunt for brands to buy. The company’s last deal was in 2023, when it acquired Naturium, developed by influencer Susan Yara and beauty brand accelerator The Center in a $355 million cash and stock deal. The Naturium deal reflected E.l.f’s interest in not only fast-growing beauty brands across the market (beyond Target, the brand was sold at prestige retail Space NK), but also in highly influential and famous faces. In 2020, E.l.f. incubated its first brand, fronted by musician Alicia Keys; that same year, it also made its first purchase with clean beauty brand W3ll People for $27 million.
Amin said all the brands in its portfolio experienced sales growth in its fiscal year, with Naturium experiencing its best year since launching in 2019.
A New Source of Strength
Bieber’s Rhode will benefit E.l.f. in a number of ways. It will be E.l.f.’s first brand in Sephora US, Canada and the UK (E.l.f. recently launched in Sephora Mexico), and will also increase the conglomerate’s gross margin, with Rhode’s 10 products ranging from $18 to $38. Core E.l.f. makeup and E.l.f. Skin products sell for $6.50 on average, less than mass competitors that retail for upwards of $10 or prestige players that sell for well over $20. Most importantly, it will give E.l.f. a stronger foothold with younger Gen-Z consumers, a fickle but important cohort as beauty wallet size shrinks.
E.l.f continues to outperform larger rivals; its sales performance last year, while lower by the company’s recent standards, is the envy of conglomerates like Coty, Shiseido and Estée Lauder, which have seen declines.
Still, the company faces headwinds as the majority of its products are produced in China, and are subject to President Trump’s “Liberation Day” tariffs. Last week, E.l.f. announced via social media that it was increasing prices across its portfolio by $1. Amin, however, stressed the firm’s supply-chain agility as well its international business, which is up 60 percent and is not subject to tariffs.
It’s perhaps E.l.f.’s digital-first roots that makes it the right conglomerate to scale Rhode. Beyond its upcoming retail expansion, the company plans to continue its investment in marketing, which has spanned out-of-the-box Super Bowl commercials and collaborations with Chipotle.
“We’ve talked about keeping our marketing rates, even in this environment, at 24 to 26 percent of net sales, and we’re doing that because our marketing is working,” Amin said. The significant return on its spend has formed a cycle of growth: “It continues to fuel our results, and we continue to invest in our own brands, and gives us the ability to acquire new brands that can continue to fuel our growth.”
Rhode, with its three years of category-shifting momentum, will be an easy sell. Still, Amin and Bieber look forward to growing the brand in tandem.
“We’re a founder’s dream,” said Amin. “We don’t overintegrate a brand … We’re not trying to change [Rhode]. We really seek to nurture a founder’s vision.”
Hailey Bieber and E.l.f.’s Tarang Amin will speak together for the first time at The Business of Beauty Global Forum. Sign up here to reserve your space. Full access to The Business of Beauty Global Forum livestream is exclusive to BoF Professional All-Access and BoF Professional Beauty & Wellness members.
