Shares of e.l.f. Beauty surged 8.4% to $53.72 after the company announced that its recently acquired rhode skincare brand — Hailey Bieber's celebrity-backed line — is entering Mexico and seven new European countries starting June 9. The expansion marks rhode's first entry into Latin America, alongside Belgium, Bulgaria, Croatia, Czech Republic, Portugal, Romania, and Switzerland. For a stock battered 65% from its 52-week high of $150.99, the move signals the $1 billion acquisition is finally starting to deliver on its global promise.
A $390 Million Brand Still Has Low Awareness Abroad. On an annualized basis in e.l.f.'s fiscal 2026, rhode delivered roughly $390 million in net sales — growing 80% year over year. Yet nearly all of that revenue came through direct online sales in a handful of markets. E.l.f.'s initial focus has been on expanding rhode's brand awareness, which stood at just 20% in the U.S. — meaning the international runway is even longer. Adding eight countries simultaneously is a bet that Bieber's cultural pull translates across borders.
International Sales Are the Growth Engine e.l.f. Desperately Needs. International net sales climbed 30% year over year in Q1 fiscal 2026, compared with just 5% growth in the U.S., and international now accounts for 20% of e.l.f.'s total sales. The rhode rollout through Sephora Europe and now direct-to-consumer in Latin America could push that share meaningfully higher. The Rhode brand expansion into Sephora Europe in September 2026 is a key forward-looking catalyst that follows this online launch.
Tariffs and Debt Still Cloud the Picture. Roughly 75% of e.l.f.'s production still comes from China, leaving it heavily exposed to sharply higher tariff rates that have led to significant gross margin contraction.
Full-year fiscal 2026 net sales rose 25% to $1.64 billion, but gross margin fell about 50 basis points to 71% due to tariff costs. Meanwhile, the balance sheet is more leveraged after recent acquisitions, with net debt of about $729 million and a net-debt-to-EBITDA ratio of 3.22 times — meaning the company owes more than three years' worth of operating profits.
The Valuation Gap Tells the Real Story. The current price-to-earnings ratio of 120.8 times is far above the 18.5 times global personal products average. Today's pop is encouraging, but investors are essentially paying for a future where rhode's global growth more than offsets China-sourced cost headwinds — a thesis that still needs several quarters of proof.