Good morning. Throughout unsure occasions, analysis exhibits it’s more practical for corporations to pursue rising development alternatives than to easily defend the established order. For e.l.f. Magnificence, that features making daring strikes to drive development by means of M&A.
The multinational magnificence firm introduced this week that it can purchase mannequin and entrepreneur Hailey Bieber’s Rhode life-style model for about $1 billion, paying $800 million in money and inventory at closing, plus a further potential earnout of $200 million primarily based on Rhode’s development over the subsequent three years.
In my dialog with e.l.f. Magnificence CFO Mandy Fields, she traced the corporate’s deal with innovation throughout unsure occasions again to the pandemic. Whereas many corporations pulled again on advertising and marketing spend and paused innovation, “we leaned into all of these issues,” stated Fields who joined the corporate as CFO in 2019. That dedication continues to this present day, she stated.
“Our strategic crucial is to construct a distinct form of firm with manufacturers that disrupt norms, form tradition, and join communities,” she defined. “And after we discovered Rhode, it checked the bins throughout all of these points. Regardless of what’s happening round us, we imagine that is the best strategic transfer for e.l.f.”
Bieber, who’s married to pop star Justin Bieber and the daughter of actor Stephen Baldwin, launched Rhode in 2022. Within the final 12 months, Rhode generated $212 million in internet gross sales. The model has an enormous social media presence, together with Bieber’s private Instagram account, which has 54 million followers.
Fields additionally famous that e.l.f. Magnificence has a disciplined strategy to M&A. The corporate acquired the skin-care model Naturium in 2023 for $355 million, doubling e.l.f. Magnificence’s presence in skincare, she stated.
Navigating tariffs
On Wednesday E.l.f. Magnificence reported income of $332.6 million for the quarter that ended March 31, a 4% improve that beat analysts’ expectations of 1.6% year-over-year development. “We noticed development throughout the board—geographically in each the U.S. and worldwide markets, and in each retail and digital channels,” Fields stated. It was the twenty fifth consecutive quarter of internet gross sales development and market share features, she stated. For the complete yr, e.l.f. Magnificence delivered 28% gross sales development and a 26% improve in adjusted EBITDA.
The corporate didn’t present a fiscal 2026 monetary outlook as a result of a variety of potential outcomes from a tariff perspective. “We simply need to see extra certainty there,” Fields stated. The corporate estimates the impression on manufacturing prices as a result of present tariff charge could be roughly $50 million yearly.
The tariff mitigation plan focuses on pricing, provide chain optimization, and enterprise diversification, Fields defined. E.l.f. Magnificence introduced final week plans to extend the price of its merchandise globally by $1 as a result of tariffs, efficient August 1. As a high-quality, worth model, even with that value improve, 75% of its merchandise will nonetheless be under $10, Fields stated. That is the corporate’s third value improve in its 21 years in enterprise.
E.l.f. Magnificence is a favourite model amongst Gen Z and is gaining reputation with millennials and Gen X. “I’m so proud to be part of an organization the place we’re clear with our group on what to anticipate,” Fields stated.
Concerning the worth improve, the “overwhelming response has been fairly optimistic from our group,” e.l.f. Magnificence CEO Tarang Amin advised Fortune in an interview. “That is precisely what we’re going through, and so they perceive,” Amin stated.
About 75% of e.l.f. Magnificence’s world manufacturing comes from China, down from 100% in 2019, Fields stated. The corporate is working with current companions to determine new places exterior China and looking for new suppliers in different areas, she defined. Moreover, 19% of the corporate’s gross sales now come from exterior the U.S., offering additional insulation from tariff dangers, she stated.
By staying clear and targeted on innovation, e.l.f. Magnificence exhibits it will possibly construct belief and seize new alternatives—even in unsure occasions.
Have a great weekend. See you on Monday.
Sheryl Estrada
sheryl.estrada@fortune.com
This story was initially featured on Fortune.com
