Hailey Bieber attends the Rhode UK launch party with Hailey Bieber in Chiltern Firehouse on May 17, 2023 in London, England.
Dave Benett | Dave Benett Collection | Getty images
Elfa beauty Announced on Wednesday plans to acquire the beauty mark of Hailey Bieber Rhode in an agreement worth up to $ 1 billion, since the cosmetics company seeks to expand even more in skin care.
The acquisition, the largest in Elf, according to FACTSET, is composed of $ 800 million in cash and shares, plus an additional potential payment of $ 200 million based on Rhode's yield in the next three years. The agreement is expected to be closed in the second quarter of prosecutor 2026 of the company, or later this year.
“I have been in the space of consumption 34 years, and they have impressed me to see this brand over time. In less than three years, they have passed from zero to $ 212 million in net sales, only direct to consumption, with only 10 products. I did not think that was possible,” said CEO Tarang Amin A CNBC in an interview. “So that interruption level definitely caught our attention.”
In a press release, Bieber said she is excited to partner with ELF to take her brand to “more expensive, places and spaces.”
“From the first day, my vision for Rhode has been to make the essential care of the skin and hybrid makeup that you can use every day,” Bieber said. “Only three years after this trip, our association with Elf Beauty marks an incredible opportunity to raise and accelerate our ability to reach more of our community with even more innovative products and expand our distribution worldwide.”
ELF's shares fell approximately 4% in extended operations after the company announced the acquisition and published results for its fourth fiscal quarter. The company exceeded Wall Street's quarterly estimates, but did not offer guidance due to the changing tariff policy of the Trump administration. ELF obtains a disproportionate amount of its products from China.
Why ELF is betting on Rhode
Throwed in 2022, Rhode has more than doubled its customer base during the past year and generated $ 212 million in revenues in the 12 months ending on March 31. The company's growth has come mainly through its website, but plans to launch in Sephora stores throughout 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 creativity, product innovation and marketing. The brand was launched along with two co -founders, Michael and Lauren Ratner, but it was the influence and name of Bieber that made it a mark of one billion dollars.
Under his direction, Rhode last year became the skin care mark number 1 in the won value of the media, or exposure through methods other than paid advertising, with a year after year of 367%.
Rhode is a solid match for EF, which has seen that growth triggers in recent years in much of its digital skill. The company has legions of online fans and is known for Tiktok marketing that feels more natural for consumers.
The company is also looking to deepen skin care, which has become more popular among all age groups, particularly the youngest consumer of ELF. In 2023, he acquired the Naturium skin care brand for $ 355 million. His acquisition of Rhode will allow you to build on your skin care growth and reach a higher income consumer.
“ELF Cosmetics costs approximately $ 6.50 in its central entrance price, Rhode, on average, is in the high 20 years, so I would say that a different consumer brings us from the company in general, but the same approach in terms of how we involve and entertain them,” said Amin.
The agreement makes sense to Elf, and it was a competitive movement to hook the brand before the rivals, but it arrives at an uncertain and difficult time for the company. Even with the expected price increases, China's tariffs will probably reduce ELF's profits over time, and is financing $ 600 million of the agreement with debt at a time of high interest rates.
The acquisition is a commitment that consumers will continue to spend on the care of high -end skin, even during possible deceleration or economic recession.
ELF exceeds earnings estimates
Elf made the announcement when he published fiscal results of the fourth quarter, which exceeded the expectations of Wall Street in the upper and lower results.
This is how the beauty retailer was performed compared to what Wall Street was anticipating, based on a LSEG analysts survey:
- Profit per action: 78 tight cents vs. 72 expected cents
- Revenue: $ 333 million compared to $ 328 million
The company's net income for the company for the three -month period that ended on March 31 was $ 28.3 million, or 49 cents per share, compared to $ 14.5 million, or 25 cents per share, a year earlier. Sales increased to $ 332.7 million, approximately 4% of $ 321.1 million.
ELF sales have increased rapidly in recent years, but investors have worried as this growth began to decrease and the threat of tariffs began to weigh their business. The company obtains about 75% of its China products, which currently faces a 30% tax in exports to the US.
While US tariffs about Chinese imports are 30% now, that could change as President Donald Trump negotiates with Beijing. As a result, ELF said it is not providing a tax perspective 2026 “due to the wide range of potential results related to tariffs.”
Amin said ELF paid more than 145% in the tasks before Trump agreed to reduce the levies on Chinese products, but those costs did not arrive during the quarter and will appear when the company informs their fiscal profits of the first quarter of the first fiscal quarter.
