E.l.f. Beauty has acquired celebrity-backed skincare brand Rhode, founded by Hailey Bieber, in a deal that brought in $212 million in net sales in under three years, according to CEO Tarang Amin. The e.l.f. Beauty acquisition represents a strategic move to expand into the prestige lifestyle category while maintaining its value-focused positioning in the competitive cosmetics market.
Speaking with Yahoo Finance’s Opening Bid, Amin emphasized the unprecedented growth trajectory of Rhode, noting that consumers are willing to wait 14 hours overnight for the brand’s pop-up events. The CEO described the phenomenon as customers “buying into the entire lifestyle” that Bieber’s brand represents through social media channels including Instagram and TikTok.
Wall Street Skepticism Despite Strong Performance
However, investor sentiment toward e.l.f. Beauty has turned cautious despite recent strong quarterly results. Shares have declined approximately 8% over the past year, reflecting concerns about the sustainability of the company’s growth momentum.
JPMorgan analyst Andrea Teixeira highlighted what she termed a “concerning” deceleration in core business growth. According to the analyst’s report, while headline numbers appear robust, they are heavily dependent on the Rhode acquisition, with organic growth in the base business expected to slow to just 2% in the second half of the year.
CEO Defends Growth Strategy
Amin dismissed the bearish outlook, attributing apparent slowdowns to accounting differences between shipment numbers and actual consumer demand. The CEO characterized these concerns as a “pipeline” accounting quirk rather than genuine weakness in brand popularity or consumer interest.
Additionally, the company is pursuing a dual-market strategy that targets both premium and value-conscious consumers. Rhode provides e.l.f. Beauty with entry into the prestige market segment, leveraging Bieber’s massive social media following despite offering only 10 products in its lineup.
E.l.f. Beauty Expands Dollar Store Footprint
Meanwhile, on the value end of the spectrum, the company has established a significant presence across 11,000 Dollar General stores nationwide. This positioning contrasts sharply with warnings from other consumer goods companies like PepsiCo about pressure on low-income shoppers.
Amin reported that 60% of customers purchasing e.l.f. Beauty products at Dollar General are new to buying cosmetics at the discount retailer. The CEO stated that the company’s ability to deliver quality beauty products at accessible price points “resonates across really all income groups,” suggesting resilience despite broader economic headwinds.
Sustainability of Growth Streak Questioned
In contrast to management’s optimism, analysts continue questioning whether e.l.f. Beauty can sustain its remarkable 28-quarter growth streak as the organic business engine shows signs of cooling. The tension between reported growth and underlying organic performance remains a focal point for investors evaluating the company’s long-term prospects.
The company’s success depends heavily on its appeal to Gen Z and millennial consumers, demographics that have demonstrated loyalty to the brand. Amin expressed confidence in maintaining this consumer base, stating he doesn’t see anything that would disrupt the current trajectory.
Market observers will be monitoring e.l.f. Beauty’s upcoming quarterly results to determine whether organic growth stabilizes or continues decelerating. The company’s ability to integrate Rhode successfully while maintaining momentum in its core value-focused business will likely determine whether Wall Street’s skepticism proves justified or premature.
