OAKLAND, Calif.—e.l.f. Beauty is making significant strides in the beauty industry with its groundbreaking $1 billion acquisition of Hailey Bieber’s skincare brand, Rhode, marking its largest transaction thus far. The company is also addressing increasing tariffs and pricing concerns for consumers with notable transparency, as CEO Tarang Amin disclosed a $1 increase in the cost of all products driven by tariffs.
The deal will see e.l.f. pay $800 million in cash and stock upfront, with an additional $200 million contingent on Rhode’s performance over the next three years. It is expected to close later this year, during e.l.f.’s fiscal 2026 second quarter.
Rhode, which exploded from launch to $212 million in annual revenue in under three years, has operated solely as a direct-to-consumer brand with a tight lineup of just 10 products. Plans are underway to roll the prestige skincare line into Sephora stores in North America and the U.K. by year-end.
“I’ve been in the consumer space 34 years, and I’ve been blown away by seeing this brand over time. In less than three years, they’ve gone from zero to $212 million in net sales, direct-to-consumer only, with only 10 products. I didn’t think that was possible,” CEO Tarang Amin told CNBC in an interview. “So that level of disruption definitely caught our attention.”
The acquisition not only strengthens e.l.f. skincare portfolio, which saw a significant boost with its $355 million Naturium deal in 2023, but also diversifies its customer base. Rhode’s average price point in the high $20s complements e.l.f. core offering, which averages around $6.50.
Hailey Bieber will remain Rhode’s Chief Creative Officer and Head of Innovation, overseeing creative direction, product development, and marketing. Her personal brand has helped Rhode dominate earned media value rankings, with 367% YoY growth in 2024.
“From day one, my vision for Rhode has been to make essential skin care and hybrid makeup you can use every day,” said Bieber. “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.”
While the acquisition positions e.l.f. for long-term growth, it comes at a challenging time. This week, the company announced it will raise product prices by $1 starting August 1 to help offset elevated tariffs on Chinese imports, a move that, according to Amin, was met with unexpectedly positive consumer feedback.
“The overwhelming response has been quite positive from our community. They appreciate [that] e.l.f. is always transparent,” Amin told Fortune. “We’re not trying to pull anything over on anyone. This is exactly what we’re facing, and they understand.”
e.l.f. sources about 75% of its products from China, down from 100% in 2019. The company is expanding manufacturing across Europe, Thailand, the U.S., and now through Rhode’s suppliers in South Korea and Italy.
“You’re going to see a globally distributed core supply chain for us, the main objective of which is to meet the global consumer demand we see for our brands,” Amin said.
The future of tariffs remains uncertain. A recent U.S. court ruling challenged the White House’s authority to impose sweeping sanctions, adding to the volatility. e.l.f. declined to provide full-year guidance for fiscal 2026, citing the unpredictable trade landscape.
Still, the company’s Q4 earnings beat analyst expectations, with revenue rising 4% year-over-year to $332.7 million and EPS reaching 78 cents, up from 25 cents a year ago. Annual net sales surged 28% to $1.3 billion.
Goldman Sachs analysts praised the Rhode acquisition, calling it a “strategic positive” that expands e.l.f. reach into premium skincare and enhances its retail potential. With international demand accelerating and a growing omnichannel presence, E.l.f. appears committed to scaling, despite external headwinds.
“While Rhode is a DTC brand, it’s expected to be rolled out into retail, including into Sephora, which we believe will further support growth ahead,” they added.
