Rodan + Fields Announces New Financing and Business Model

Fresh off a $75 million funding round, skin-care line Rodan + Fields has unveiled a new business model, leading to the elimination of about 100 jobs.

Effective September 1, the company will move away from a multi-tiered direct sales model to a new affiliate program, which will be supported by a broader range of marketing and advertising across traditional channels and social media.

Under the new affiliate program, existing R+F consultants who continue to sell R+F products will receive higher commissions on client sales and product discounts, he said. Commissions consultants received from product sales by those they recruited will no longer be part of R+F’s model.

In an interview with WWD, R+F CEO Dimitri Haloulos said, “We are one of the countries where the probability of recommendation is highest. But as the world evolves and changes and customers seek information from different sources and different marketing mediums, we believe we need to evolve.”

When asked if the failure of Beautycounter, whose products were also distributed through independent sellers in a multi-level marketing model, had anything to do with this decision, the answer was a resounding no.

“Beautycounter had no impact on this project. It’s all about changing consumer trends,” he said. “It allows the majority of our consultants, over 90%, to earn more on each sale and helps us put the brand in the hands of more consumers.”

Recently, the MLM model has faced competition from TikTok Shop, independent brands, and Amazon. In May, Moody’s, the credit rating agency, downgraded R+F, once a billion-dollar company, to its lowest rating, citing a decline in the number of consultants and a changing consumer shopping landscape.

As part of its business model evolution, R+F also reorganized its corporate structure, resulting in the elimination of approximately 100 positions. This is in addition to the 76 layoffs that were made at R+F’s San Francisco Bay Area office, according to a WARN notice filed with the state of California in September 2023.

R+F said it has reached an agreement with its existing minority shareholders that will provide it with up to $75 million in new financing to strengthen its capital structure and financial position. The transaction is expected to close later this year. The group declined to provide further details.

The anti-aging skincare line was launched by Proactiv founders and practicing dermatologists Dr. Katie Rodan and Dr. Kathy Fields in 2000. It was later acquired by The Estée Lauder Cos., but was repurchased by Rodan and Fields in 2007 and relaunched the following year with a direct sales model, creating a network of independent consultants to sell the products. In the spring of 2018, TPG made a strategic minority investment in R+F.

The brand branched out into hair care about 18 months ago and recently launched a lip plumping oil, which has been a hit. A new product will be unveiled later this week, according to Haloulos, who did not disclose the category.