Beauty's Hottest New Trend: The Founder Buyback
After last week's billion dollar acquisition of Rhode by E.l.f. Beauty and Church & Dwight's $700 million purchase of hand sanitiser label Touchland, the 2025 M&A beauty market appears to be looking up.
But the arc of Huda Beauty traces along a bigger shift in the beauty industry. When the brand launched in 2013, it did so in the heat of the celebrity makeup moment; Kylie Jenner's pigmented lip kits and Rihanna's 40-shades of foundation came next. Billion dollar valuations followed for an elite set that included Kattan, Jenner and makeup artists like Anastasia Soare, Charlotte Tilbury and Pat McGrath. In the years since, some have seen their businesses flourish (see: Puig's majority acquisition of Charlotte Tilbury, valued at $1.2 billion) while others have lost their grip.
In the decade since Huda Beauty's debut, a shiny new class of celebrity founders, like Bieber's Rhode and Selena Gomez's Rare Beauty, have risen to the vanguard, succeeding with direct customer relationships and outsize sales, strong operational teams and a simple but refined focus on exactly what they do well. A following is no longer enough in the cut-throat beauty business, unless you can continuously convert them to shoppers. The Social Network
What does Kattan have? In addition to an estimated $450 million in annual sales as of 2024, the brand benefits from a wide international distribution and a wide array of best-sellers. But its most impressive feat may be that, despite 12 years in business — 120 years in beauty — Kattan hasn't lost her relevance online. Huda Beauty's best asset is Huda herself.
As a vlogger, the US-born and Dubai-based Kattan was perhaps something of the original beauty influencer. Her own line, which she founded with her sisters Mona and Alya, was an instant hit, as her high-definition makeup looks (fluffy lashes, sleek contours) and a critic's eye toward formulas translated seamlessly into a cosmetic range that still mints regular hits, like last year's Easy Blur airbrush foundation.
In 2014, four years after Instagram launched, Kattan hit 1 million followers; three years later, she had 18 million, and has 57 million today, according to the app. RivalIQ calculated that @hudabeauty's engagement rate is eight times the going average for beauty brands. If Kattan's public support of Palestinians in the Gaza war has polarised some of her audience, the tens of thousands of comments her posts draw seem only to strengthen her reach.
Trends like the clean girl aesthetic and 'Euphoria' makeup may have come and gone, but Kattan's influence still powers Huda Beauty the brand; it consistently outranks others when it comes to social media performance. It was the #4 top ranked makeup brand in 2024, beating out LVMH's Dior and Fenty, said Launchmetrics. In the first quarter 2025, it was the top of CreatorIQ's list, narrowly besting Selena Gomez' Rare Beauty. Spate analyst Mathilde Riba reported that Huda Beauty charts nearly a 7 out of 10 on the firm's 'sentiment index.' Buyback to Bounce Back
As a Revlon makeup artist living in opulent Dubai, Kattan's ultra-glam look hooked a generation of beauty obsessives on her cosmetics almost immediately. But two subsequent skincare forays, Wishful (launched in 2020) and Glowish (in 2021) were less successful, and ultimately didn't satisfy customers who had fallen for Kattan's contours and cut creases. The lines were eventually phased out of Sephora, and now linger on the line's e-commerce website.
Kattan heads into the next phase 'hyper-focused' on Huda Beauty, she told Women's Wear Daily — an easier task without the distractions of the fragrance and skincare businesses.
But the founder-led buyback can be tricky: French conglomerate Coty took a $71 million loss when it sold its stake in skincare brand Skkn back to founder Kim Kardashian three years after its purchase. And the clean label Beautycounter, which founder Gregg Renfrew bought out of bankruptcy last year, has taken time to reposition itself ahead of a relaunch scheduled for this summer.
Huda Beauty and TSG may not have had the fairytale exit that Charlotte Tilbury scored with Puig, but given the glut of colour cosmetics brands currently in market, maybe it was the best outcome. The San Francisco-based TSG Consumer Partners, is known to be more of a short-term investor; the firm took a minority stake in It Cosmetics in 2012, cashing out in 2016 when the brand sold to L'Oréal for $1.2 billion. It made a similar manoeuvre with E.l.f., in which it bought a minority stake in 2011 that grew to a majority stake by 2014, two years before the line's IPO. More recently, it announced a 'strategic growth investment' in Marianna Hewitt and Lauren Ireland''s Summer Fridays, implying that influencer-fronted brands still have bright futures ahead.
And what of the fierce competition?
As more and more beauty brands come to market and also languish in the M&A waiting room, they'd be wise to stay close to their core. That's the thing about a once-in-a-lifetime founder: There's only one person who can see the vision through. Otherwise, they have to let it go.
With additional reporting by Priya Rao.
Sign up to The Business of Beauty newsletter, your complimentary, must-read source for the day's most important beauty and wellness news and analysis.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Insider
36 minutes ago
- Business Insider
Trump didn't just cut a deal with Vietnam — he was targeting China, too
On Wednesday, Trump announced a trade deal with Hanoi that would levy 20% on imports from Vietnam, down from the 46% rate Trump announced on "Liberation Day." In return, Vietnam has agreed to allow American goods to enter the country duty-free. What's also significant is that Trump announced a 40% tariff on goods shipped from another country via Vietnam to the US — a move that analysts say is aimed squarely at transshipments from China. "The 'China quotient' in US negotiations with other Asian economies is arguably evident in the deal with Vietnam," wrote Vishnu Varathan, Mizuho's macro research head for Asia, excluding Japan, in a Thursday note. "The US's intent is quite obviously to not disincentivize Vietnam's role as a substitute for China at a lower 20% tariff," he added. Vietnam has benefited from global supply-chain shifts away from China since Trump's initial trade war during his first term. In response to those tariffs, many multinational companies, including Chinese firms, moved manufacturing operations to lower-cost hubs like Vietnam to sidestep US duties. Last year, the US ran a $123.5 billion trade deficit with Vietnam, making it America's third-largest trade gap after China and Mexico, according to the US Trade Representative's office. A model for future trade deals? The move follows a temporary truce between Washington and Beijing in May, when both sides agreed to a 90-day pause in their tariff war. The US slashed duties on Chinese goods from 145% to 30%, while China lowered its tariffs on American imports from 125% to 10%. Still, the transshipment tariff on Vietnam underscores the Trump administration's effort to close the backdoor for Chinese exporters seeking loopholes into the US market. "A tariff framework that targets transshipment while preserving the potential benefits of efficient cross-border commerce is a smart move— and a model for future trade deals — if enforced transparently and paired with clear rules of origin," wrote Eli Clemens, a policy analyst at Washington-based Information Technology and Innovation Foundation, a nonpartisan research institute, on Wednesday. The move also shows that Washington can stop Chinese supply chains from extending themselves into Southeast Asia. "Future trade negotiations should also include targeted transshipment deterrents that level the playing field for US manufacturers and retailers," Clemens wrote. Asia in a bind Washington's focus on transshipment enforcement puts pressure on other Asian economies, which may find themselves forced to choose sides. "It would be remiss to ignore this critical pillar of US trade deals with the rest of Asia, which is trained on undermining China's economic reach and influence," wrote Varathan. The deal may also reinforce Beijing's view that US trade negotiations lacks "good faith." It could prompt retaliation — not just against the US, but also against Asian economies seen as siding with Washington. "Other Asian economies will be particularly vulnerable to a two-sided geoeconomic squeeze given that their reliance on both China and US are significant," Varathan added. Despite reservations about the deal, it still excited investors. The S&P 500 and the Nasdaq Composite soared to record highs on Wednesday, and US stock futures are extending gains early on Thursday. Vietnam's widely followed VN-Index also rose to its highest level since April 2022.
Washington Post
44 minutes ago
- Washington Post
Dubai's booming restaurant scene is feeling the heat of high costs and high failure rates
DUBAI, United Arab Emirates — From suspended tables to underwater lounges, some 13,000 food and drink establishments in Dubai pull out all the stops to attract customers in one of the world's most saturated dining markets. They cater to all tastes and budgets. Some spots ladle out inexpensive biryani while others offer dishes dusted with edible gold.
The Hill
44 minutes ago
- The Hill
Dubai's booming restaurant scene is feeling the heat of high costs and high failure rates
DUBAI, United Arab Emirates (AP) — From suspended tables to underwater lounges, some 13,000 food and drink establishments in Dubai pull out all the stops to attract customers in one of the world's most saturated dining markets. They cater to all tastes and budgets. Some spots ladle out inexpensive biryani while others offer dishes dusted with edible gold. These are some of the ways the emirate is competing with its neighbors Saudi Arabia and Qatar for tourist dollars and, so far, it's beating them handily. Dubai has more restaurants per capita than any major city except Paris. But the city-state's booming restaurant scene is testing the limits of its growth-at-all-costs model, raising questions about how long Dubai can keep feeding its own ambitions. The competition is cutthroat, so presentation is key. 'Gone are the days when it just tastes good,' said Kym Barter, the general manager of Atlantis The Palm, a resort perched on a manmade archipelago that boasts more Michelin stars than any other venue in the Middle East. But dazzling Dubai's food bloggers — the most popular of whom have millions of social media followers — isn't enough. Staying afloat means battling high rents and winning over a diverse and demanding group of consumers. Dubai has roughly nine expatriate residents for every Emirati citizen. Most of its private sector workers are migrants on temporary contracts, and only Vatican City has a higher share of foreign-born residents. Tourists, in turn, outnumber locals about five to one by some estimates, and they spend lavishly. Visitors to Dubai drop an average of over five times more than those traveling to nearby Saudi Arabia or even the U.S., according to global restaurant consultant Aaron Allen. Dubai is 'on the right path' to becoming the world's food capital, said Torsten Vildgaard, executive chef at FZN by Björn Frantzén. The restaurant, which runs at more than $540 a head, was one of two in Dubai to nab three Michelin stars in May. 'We're only seeing the tip of the iceberg of what's to come in terms of gastronomy here,' Vildgaard added. With each new set of illuminated high-rises and hotels, another crop of eateries emerge, vying for patrons. The legions of construction workers powering Dubai's progress also need affordable options. That growth, propped up in part by investor pressure on some of the world's biggest chains to expand in Dubai, has created what some analysts warn is a bubble. 'If you're a publicly traded company like Americana, what are you supposed to do — just stop opening restaurants?' restaurant consultant Allen said, referring to the Gulf-based operator of KFC, Pizza Hut and other big franchises. The frenetic expansion of Dubai's restaurant industry is part of a regional shift that has seen Gulf Arab states pour hundreds of billions of dollars into building out tourist destinations as they move away from hydrocarbons to diversify their economies. Saudi Arabia has a high-stakes, $500 billion project: a straight-line futuristic city called Neom. But, in a Muslim-majority region, the United Arab Emirates has gone to lengths that some consider too much of a compromise, including relaxing restrictions on alcohol that fuel its pubs and nightlife and other social reforms. The rapid development comes at a price. Dubai's restaurants have a high failure rate, industry veterans say, though local authorities don't say what the rate of closures is. In the downtown district and other prime areas, annual rents for restaurants can top $100 per square foot. That's on a par with some of the world's most expensive cities. Still, the emirate issued almost 1,200 new restaurant licenses last year, according to Dubai's Department of Economy and Tourism. The department declined to respond to questions. Empty tables during peak hours are common, even in top locations. Part of the problem, managers say, is that traffic congestion is so severe that convincing diners to drive out can be a tall task. 'I sometimes go, 'Do I go into the restaurant right now, because I'm going to get into traffic?''' said Waseem Abdul Hameed, operations manager at Ravi, a Pakistani family-owned eatery famous for its official Adidas shoe line and a 2010 TV feature from Anthony Bourdain. He knows restaurateurs who have had to shut up shop and others who are squeezed by slim margins and increasingly reliant on delivery apps, Hameed said. The demand sends fleets of migrant workers racing through gridlock on motorbikes, with few protections and tight delivery windows. Emirati newspaper Khaleej Times reported the accidental deaths of 17 Dubai food couriers last year. The math of Dubai's restaurant scene doesn't add up, delivery apps and wealthy tourists notwithstanding, restaurant consultant Allen said. He cited operating expenses that have more than doubled relative to sales since 2009, when a financial crisis almost hobbled the emirate. Too many Dubai entrepreneurs, he put it simply, have 'too much money, and they don't know what to do besides open restaurants.'
