Elf Beauty to acquire the Hailey Bieber Rhode brand in a billion dollars

Elf beauty On Wednesday, on Wednesday, announced on Wednesday, acquire the beauty brand of Hailey Bieber, Rhode in an agreement of a value of up to $ 1 billion, the cosmetics company seeks to develop more in skin care.

Acquisition – the largest in Elf, according to FactSet – includes 800 million dollars in cash and shares, plus an additional payment of $ 200 million on the basis of the Rhode performance in the next three years. The agreement should conclude in the second quarter of the company 2026 of the company – or later this year.

“I have been in consumer space for 34 years, and I was breathtaking when I saw this brand over time. In less than three years, they have gone from zero to $ 212 million in net sales, directly consumed, with only 10 products. I did not think it was possible,” said CEO Tarang Amin in an interview. “So this level of disturbance has certainly drawn our attention.”

In a press release, Bieber said that she was delighted to associate himself with Elf to bring her brand to “more faces, places and spaces”.

“From the first day, my vision of Rhode was to do essential skin care and hybrid makeup that you can use every day,” said Bieber. “Barely three years on this trip, our partnership with Elf Beauty marks an incredible opportunity to raise and accelerate our ability to achieve more of our community with even more innovative products and to expand our distribution worldwide.”

Elf shares have dropped by around 4% of prolonged exchanges after the company announced the acquisition and published results for its fourth tax quarter. The company has exceeded the quarterly estimates of Wall Street, but did not offer advice due to the evolution of the Trump administration pricing policy. Elf obtains a disproportionate quantity of its products from China.

Launched in 2022, the Rhode has more than doubled its customers in the past year and generated $ 212 million in income in the 12 months completed on March 31. The growth of the company has mainly crossed its website, but it plans to embark on Sephora stores across North America and the United Kingdom before the end of the year.

As part of the acquisition, Bieber will serve as creative director of Rhode and chief of innovation, supervising creation, product innovation and marketing. The brand was launched alongside two co-founders, Michael and Lauren Ratner, but it was the influence and name of Bieber that transformed it into a billion dollars.

Under its leadership, last year Rhode has become the brand of skin care n ° 1 in the value of the media gained – or exposure by methods other than remunerated advertising – with a growth of 367% from one year to the next.

Rhode is a solid correspondence for Elf, which has increased largely in large part of the years largely to its digital prowess. The company has legions of online fans and is known for Tiktok marketing which seems more natural towards consumers.

The company also seeks to deepen skin care, which has become more popular with all age groups, especially the youngest ELF consumer. In 2023, he acquired the Naturium skin care brand for $ 355 million. Its Rhode acquisition will allow it to rely on its growth in skin care and reach a higher income consumer.

“Elf Cosmetics is around $ 6.50 in its main entry price, Rhode, on average, is in the 1920s, so I would say that it brings us a different consumers in the company as a whole, but the same approach in terms of our way of engaging and entertaining them,” said Amin.

The agreement makes sense for Elf, and it was a competitive decision to get the brand before the competitors, but it comes at a uncertain and difficult time for the company. Even with the expected price increases, China’s prices will probably reduce Elf’s profits over time, and it finances $ 600 million from the agreement with debt at the time of high interest rate.

The acquisition is a bet that consumers will continue to spend on high -end care, even during an economic slowdown or a potential recession.

Elf made this announcement by displaying financial results in the fourth quarter, which beat Wall Street’s expectations on the upper and lower lines.

Here is how the beauty retailer worked in relation to what Wall Street provided, based on a survey of LSEG analysts:

• Profit by action: 78 cents adjusted vs 72 cents expected
• Income: $ 333 million against $ 328 million expected

The declared net profit of the company for the period of three months which ended on March 31 was $ 28.3 million, or 49 cents per share, against $ 14.5 million, or 25 cents per share, a year earlier. Sales reached $ 332.7 million, up approximately 4%, compared to $ 321.1 million.

Elf sales have increased rapidly in recent years, but investors have worried because growth has started to slow down and the threat of prices began to weigh on its business. The Company is obtaining approximately 75% of its products from China, which currently faces an obligation of 30% on exports to the United States last week, it announced its intention to increase prices by $ 1 to compensate for higher costs of prices starting on August 1.

Although American rights on Chinese imports are now 30%, this could change as president Donald Trump Negotiate with Beijing. Consequently, Elf said that he did not provide prospects for 2026 “due to the wide range of potential results related to prices”.

AMIN said that ELF had paid more than 145% of the rights before Trump accepts to reduce samples from Chinese products, but these costs have not been occurred during the quarter and will arise when the Company will publish its first quarter of the 2026.