Mannequin Hailey Bieber’s make-up and skincare model, Rhode, is being snapped up by Elf Magnificence for about $1 billion, giving the price range beauty retailer entry to a celebrity-endorsed product line that has turn out to be massively in style amongst Gen Z and millennials.
Elf mentioned on Wednesday it will pay Rhode shareholders $800 million in a mix of money and inventory and a further potential earnout consideration of $200 million topic to sure performance-related situations.
Final month, Reuters reported that Bieber was exploring a sale of the model, which may very well be value greater than $1 billion.
For Elf, the deal would mark a shift in technique and develop into the status magnificence market as the corporate faces weak demand from mass market clients who’re being pressured by persistent excessive inflation.
“The Rhode deal is a bold move for e.l.f. into premium beauty at a time when the prestige side of the industry has lost some of its momentum as a result of consumers buying less or trading down,” mentioned Sky Canaves, eMarketer analyst.
Nevertheless, Rhode has bucked this pattern, Canaves added, with a robust Gen Z following and vital buzz round its product launches, positioning it nicely for a robust growth.
Elf — brief for eyes, lips and face — provides merchandise priced as little as $2 at US retailers together with Walmart, Ulta Magnificence and Goal.
Then again, Rhode — which launched in 2022 and gained recognition with TikTok viral merchandise similar to its $18 “peptide lip treatments” — sells solely by way of its personal web site or pop-up shops, relying closely on Hailey Bieber’s social media affect.
“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,” Bieber mentioned.
The corporate raked in about $212 million in gross sales for the 12 months ended March 31 and is planning to start out promoting at Sephora shops throughout the US and Canada coming this fall, adopted by the UK.
“Rhode further diversifies our portfolio with a fast-growing brand that makes the best of prestige accessible,” Elf CEO Tarang Amin mentioned in a press release.
Earlier this 12 months, Elf’s shares cratered 20% after the corporate lower its annual forecasts and warned of weakening demand.
Elf’s take care of Rhode would mark its largest acquisition to this point and follows its $355 million acquisition of skincare firm Natrium in 2023.
Bieber will proceed her position as founder and also will act as a “strategic advisor” after the deal closes. The transaction is predicted to shut within the second quarter of fiscal 2026.
Individually, Elf on Wednesday shunned offering a fiscal 2026 forecast as a consequence of uncertainty surrounding import tariffs regardless of beating Wall Road expectations for fourth-quarter gross sales.
The corporate, which sources about 75% of its merchandise from China, down from 100% again in 2019, mentioned final week it will elevate costs by $1 to fight tariff strain.
