In the ever-evolving landscape of the beauty industry, where trends shift as quickly as the seasons, a monumental deal has shaken the very foundations of the market. On a Wednesday that will undoubtedly go down in history, Hailey Bieber’s beauty brand, rhode, was acquired by the budget makeup powerhouse e.l.f. Beauty for a staggering $1 billion. This acquisition is not just a financial transaction; it is a seismic shift in the beauty world, a testament to the power of vision, innovation, and the undeniable allure of a brand that has captured the hearts and wallets of consumers worldwide.

This acquisition is e.l.f.’s largest to date, dwarfing its previous $355 million purchase of the skincare brand Naturium in 2023. It is a bold move that signals e.l.f.’s intent to dominate the beauty market, leveraging the unique strengths of both companies to create a synergy that will be hard for competitors to match. Founded in 2022 by Hailey Bieber, along with Michael D. and Lauren Ratner, rhode has already achieved remarkable success. In its last fiscal year, which concluded in March, the brand amassed $212 million in net sales. This is a staggering figure for a brand that is still in its infancy, a testament to the brand’s ability to connect with consumers on a deeply personal level.

One of the most exciting aspects of this acquisition is the role that Hailey Bieber will continue to play in the brand. As rhode’s chief creative officer and head of innovation, she will bring her unique vision and creativity to the forefront, ensuring that the brand remains at the cutting edge of beauty trends. Bieber’s involvement is more than just a celebrity endorsement; she is the heart and soul of rhode, having built it from the ground up. Her influence extends beyond the products themselves; she has created a community of loyal followers who eagerly await each new release and are willing to wait in line for hours to experience the brand’s magic firsthand.

rhode’s success can be attributed to several key factors. Firstly, the brand has a powerful engagement model, bolstered by Hailey Bieber’s substantial social media presence. Bieber’s digital footprint, both before and after her marriage to singer Justin Bieber, has allowed her to reach millions of people around the world. Her followers are not just fans; they are a community, united by their love for rhode and their admiration for Hailey. This community is fiercely loyal, often waiting in line for hours to attend rhode pop-up events and snapping up products as soon as they hit the website. The brand’s products are frequently sold out, a testament to the high demand and the exceptional quality of what rhode offers.

Another factor contributing to rhode’s success is its focus on a tight product assortment. CEO Tarang Amin highlighted this during an earnings call, noting that the brand offers only 10 products across skincare, color cosmetics, and accessories. This curated selection allows rhode to maintain a high level of quality and consistency, ensuring that each product is a standout in its category. It also makes the brand approachable and easy to navigate for consumers, who can trust that every product they purchase from rhode will meet their high expectations.

e.l.f. Beauty, on the other hand, is a force to be reckoned with in the beauty industry. Dominating the skincare and makeup market for young consumers, e.l.f. has earned the title of teens’ top cosmetic brand, according to a survey from investment firm Piper Sandler. This acquisition of rhode is a strategic move that will allow e.l.f. to expand its reach and strengthen its position in the market. The company has the resources and expertise to help rhode expand into retail and increase its global footprint, taking the brand to new heights and making it accessible to an even larger audience.

However, this acquisition comes at a challenging time for e.l.f. The company is currently navigating the complexities of President Donald Trump’s chaotic tariff war with China. As of mid-May, approximately 75% of e.l.f.’s global production originated in China and was subject to tariffs of 55%, including those imposed in 2019. In response to these tariffs, e.l.f. announced a price increase of $1 across its entire portfolio, effective August 1. This decision was communicated transparently to the company’s community through an Instagram post, which featured images of cosmetics with googly eyes edited onto them. The post acknowledged the impact of inflation and tariffs on the company, stating, “Not gonna lie, inflation and tariffs are hitting us hard.” Despite the challenges, the company received an overwhelmingly positive response from its customers, who understand the need for price adjustments in the face of such economic pressures.

e.l.f. has not issued guidance for this fiscal year due to the uncertainty surrounding tariffs. However, the company remains committed to its China-based supply chain, which it believes is a competitive advantage that has been refined over the past 21 years. CEO Tarang Amin emphasized this commitment during an earnings call, stating that the company’s international unit is the fastest-growing part of its business, having increased by 60% in the past year. This growth is not subject to tariffs, highlighting the resilience and adaptability of e.l.f. in the face of economic challenges.

The rhode acquisition deal is structured as $800 million in cash and stock, with the potential for an additional $200 million based on rhode’s performance over the next three years. This structure provides an incentive for both companies to work together to ensure the continued success and growth of rhode. The deal is expected to close later this year, marking the beginning of a new chapter for both e.l.f. and rhode.

This acquisition is more than just a financial transaction; it is a strategic partnership that will reshape the beauty industry. By combining the strengths of e.l.f. and rhode, the two companies will be able to leverage their unique assets to create a powerful force in the market. e.l.f. will benefit from rhode’s innovative approach to beauty and its loyal customer base, while rhode will gain access to e.l.f.’s extensive resources and expertise in retail expansion.

The acquisition of rhode by e.l.f. Beauty is a landmark moment in the beauty industry. It is a testament to the power of vision, innovation, and community-building, qualities that Hailey Bieber has exemplified through her leadership of rhode. As e.l.f. navigates the challenges of tariffs and economic uncertainty, this acquisition provides a beacon of hope and a vision for the future. Together, e.l.f. and rhode will undoubtedly create a powerful synergy that will continue to captivate and inspire consumers around the world.