NEW YORK: Model Hailey Bieber’s makeup and skincare brand, Rhode, is being snapped up by Elf Beauty for about US$1bil, giving the budget cosmetic retailer access to a celebrity-endorsed product line that has become hugely popular among Gen Z and millennials.
Elf said on Wednesday it would pay Rhode shareholders US$800mil in a combination of cash and stock and an additional potential earnout consideration of US$200mil subject to certain performance-related conditions.
Last month, Reuters reported that Bieber was exploring a sale of the brand, which could be worth more than US$1bil.
For Elf, the deal would mark a shift in strategy and expand into the prestige beauty market as the company faces weak demand from mass market customers who are being pressured by persistent high inflation.
“The Rhode deal is a bold move for e.l.f. into premium beauty at a time when the prestige side of the industry has lost some of its momentum as a result of consumers buying less or trading down,” said Sky Canaves, eMarketer analyst.
However, Rhode has bucked this trend, Canaves added, with a strong Gen Z following and significant buzz around its product launches, positioning it well for a strong expansion.
Elf – short for eyes, lips and face – offers products priced as low as US$2 at US retailers including Walmart, Ulta Beauty and Target.
On the other hand, Rhode – which launched in 2022 and gained popularity with TikTok viral products such as its US$18 “peptide lip treatments” – sells exclusively through its own website or pop-up stores, relying heavily on Hailey Bieber’s social media influence. — Reuters
