Hailey Bieber’s Rhode Sold to e.l.f. Beauty for $1 Billion: A Game-Changer for Budget Beauty?

New York, NY, May 29, 2025 - Hailey Bieber’s beauty brand, Rhode, was acquired by budget makeup giant e.l.f. Beauty for $1 billion on Wednesday, marking the largest acquisition in e.l.f.’s history. The deal, surpassing e.l.f.’s $355 million purchase of Naturium in 2023, integrates Rhode’s rapidly growing skincare and cosmetics line, which generated $212 million in net sales for the fiscal year ending March 2025, according to company filings.

Rhode, founded by Bieber in 2022, has cultivated a fervent following, with products often selling out online and fans lining up for hours at pop-up events. As e.l.f. navigates challenges from new tariffs on its China-based supply chain, the acquisition positions Rhode for expanded retail presence, including in Sephora stores across North America and the UK, while leveraging e.l.f.’s dominance in the teen beauty market.

Rhode’s Rise and Strategic Fit

Since its launch, Rhode has capitalized on Hailey Bieber’s 52 million Instagram followers and a tightly curated portfolio of 10 products spanning skincare, color cosmetics, and accessories. The brand’s minimalist approach and strong social media engagement have driven its success, with a 28% year-over-year sales increase in Q1 2025, per Women’s Wear Daily. E.l.f. Beauty, named the top cosmetics brand for teens in Piper Sandler’s Spring 2025 survey, sees Rhode as a complementary addition to its portfolio, which includes budget-friendly products largely priced under $10.

CEO Tarang Amin highlighted Rhode’s “powerful engagement model” during Wednesday’s earnings call, noting its potential for global expansion. Bieber will remain as Rhode’s chief creative officer and head of innovation, ensuring continuity in the brand’s vision.

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Tariff Challenges Loom Large

The acquisition comes as e.l.f. grapples with President Donald Trump’s reinstated tariffs, with 75% of its production sourced from China now facing 55% duties, up from 25% in 2019, according to Reuters. To offset costs, e.l.f. announced a $1 price increase across its portfolio effective August 1, 2025, a move that could test its appeal among price-sensitive consumers. Despite the uncertainty, e.l.f. declined to issue fiscal year guidance, citing volatile tariff impacts.

However, the company reaffirmed its commitment to its China-based supply chain, which it views as a competitive advantage honed over 21 years. Analysts at Jefferies estimate that the tariffs could reduce e.l.f.’s operating margin by 2-3% in 2026, potentially offset by Rhode’s high-margin sales.

Did You Know?
Rhode’s signature Peptide Lip Treatment sold out within 48 hours of its launch in 2022, generating over $5 million in sales in its first week, per industry reports.

Future Growth and Industry Impact

The $1 billion deal, comprising $800 million in cash and stock and up to $200 million in performance-based payouts over three years, is expected to close by late 2025. E.l.f. aims to leverage its retail expertise to scale Rhode’s presence, particularly through Sephora’s 2,700 global stores, where Rhode products debuted in March 2025. The acquisition aligns with a broader trend of celebrity-driven brands gaining traction, with Statista reporting that the global beauty market is projected to reach $670 billion by 2027.

However, competition from rivals like L’Oréal and Estée Lauder, which are also expanding budget lines, could challenge e.l.f.’s dominance. The success of the Rhode integration will hinge on maintaining its cult following while navigating economic headwinds.