Hailey Bieber built a $1 billion beauty brand in three years.
THE DETAILS
E.l.f. Beauty has consented to pay $800 million to Rhode’s equity holders at the conclusion, which includes $600 million in cash and $200 million in new shares of e.l.f. Beauty common stock. And e.l.f. could pay an additional $200 million, contingent upon the brand’s expansion over the next three years.
THE CONTEXT
Amin stated that e.l.f. and Rhode are both popular among a variety of generations, but Gen Z is notably fond of them. Rhode was established in 2022 and has experienced rapid growth. The company offers a limited selection of products, such as lip pigments ($18) and pocket blushes ($24). E.l.f. reported that Rhode sales amounted to $212 million for the fiscal year ending on March 31. The brand will be available for purchase at Sephora later this year.
Additionally, the acquisition facilitates the diversification of e.l.f.’s supply chain beyond China. Amin stated that approximately 75% of e.l.f. products are manufactured in China and are currently subject to a 55% tariff. There was a recent increase in the prices of each item by $1 at the company. E.l.f.’s Camo Liquid Blush is currently priced at $7, while Squeeze Me Lip Balm is priced at $4.
According to Mandy Fields, Chief Financial Officer of e.l.f., Rhode’s suppliers are primarily located in Europe, the United States, and other regions of Asia.
MORE DETAILS
Co-founding the skincare product line in 2022, the 28-year-old, who is married to performer Justin Bieber, gave it her middle name. The line includes lip tints and blush.
It has experienced accelerated growth as a result of its online popularity, with over $200 million in net sales in the year ending in March. Additionally, it has plans to introduce its products in Sephora stores in the United States and the United Kingdom this year.
Buyer e.l.f. Beauty described the business as “a beautiful brand that we believe is ready for rocketship growth” in its announcement of the deal.
In exchange for the company, e.l.f, which stands for eyes, lips, and face, is providing $800 million in cash and stock. A potential additional $200 million payout is contingent upon future sales development.
The transaction is anticipated to be finalized later this year.
Hailey Bieber, who will remain with the company as chief creative officer, declared on social media that the agreement signified the “next chapter” for the brand. The business will be managed by current executives and other co-founders following the sale.
In the business announcement, she stated, “Our partnership with e.l.f. Beauty represents an extraordinary opportunity to enhance and expedite our capacity to expand our distribution globally and reach a broader segment of our community with even more innovative products.”
The brand has gained significant popularity on social media, with viral TikToks featuring their “peptide lip treatments” and pocket blush.
Hailey Bieber’s decision to establish a beauty line is consistent with that of other celebrities, including Rihanna, whose Fenty Beauty was estimated to be worth nearly $3 billion last year, according to Forbes.
It also follows Kylie Jenner, who sold a portion of her cosmetics company to Coty for $600 million in 2020, and Selena Gomez’s Rare Beauty line, which garnered her a spot on the Bloomberg billionaire index last year.
According to a Nielsen IQ report, celebrity cosmetic brands generated over $1 billion in sales in 2023.
Ms. Bieber is the niece of actors Alec, William, and Daniel Baldwin and the daughter of thespian Stephen Baldwin. Last year, she and her spouse welcomed their first child.
She expressed her surprise at the Rhode brand’s success in an interview for a Vogue cover story that was published prior to the announcement of the transaction.
“It has already exceeded my most ambitious expectations,” she stated.
