Beauty mogul and reality star, Kylie Jenner, has sold her eponymous makeup and skincare lines for $880 million to Coty.
Kylie Jenner, made famous by her role in Keeping Up with the Kardashians and her powerful online influence, began the cosmetics company in 2015. Originally named Kylie Lip Kits, Miss Jenner was only 18 years old when she began the business. In 2019, Forbes named her as the youngest ‘self-made’ billionaire in history.
What is Kylie Cosmetics?
In the first 18 months of operating, Kylie Cosmetics generated USD420 million in revenue. Since then, she has delved into eyeshadow palettes, lipsticks, skincare and other cosmetics. The company began its multichannel strategy in 2017 when it opened its first pop-up store in LA. Kylie Cosmetics is now sold in more than 1,000 Ulta stores across the United States as well as via her e-commerce platform.
Why the Sale?
In 2018, Forbes estimated that the cosmetics brand is valued at USD800 million; in May 2019, it’s estimated to be valued at about USD1.2 billion. The sale aims to diversify the product and turn Kylie Cosmetics into an ‘international beauty powerhouse’. The Chairman of Coty Beauty, Peter Harf, noted that Kylie Jenner is a ‘modern-day icon, with an incredible sense of the beauty consumer’.
Fifty-one per cent of the makeup brands, Kylie Cosmetics and Kylie Skin, has been purchased by Coty. While she will still have a major stake in what goes into the product, her name and imagery, etc, Coty will have the majority control over the business.
Coty is an American health and beauty company that was established in 1904. As of 2018, it owns 77 brands that fall under the fragrances, cosmetics, skincare, nail care, and both professional and retail hair care categories.
Is this a Smart Move?
In short, yes. Kylie Cosmetics continues to sell well throughout the younger generation (Young Millennials and Gen Z). In 2018, Kylie Cosmetics generated USD360 million in sales. any Gen Z shoppers are turning away from heavy beauty shopping and turning their focus on skincare. Of course, Kylie Jenner also has a skincare line – It launched in 2019 and received backlash for some of the featured products in the collection. One item in particular, the walnut scrub, caused a stir as the ingredients can further damage the skin rather than improve it.
Moreover, there have been quite a few controversies surrounding Kylie Cosmetics since its inception. From a set of brushes that were priced at USD350 and deemed not worth the price tag to the lack of diversity in its concealer range, the company has seen its fair share of scandals since it launched. With the sale to Coty, it could streamline the process of creating products and make sure they’re aligned with Coty’s values and guidelines. Coty also owns the likes of Wella, Clavin Klein, Rimmel, Burberry Beauty and Max Factor.
According to Time Magazine, Coty has been under pressure to change the business strategy. As such, it has taken a USD965 million write-down this year on brands it bought from Procter & Gamble in 2015. Kylie Cosmetics is the first move it’s taken to change its strategy, and is a ‘key milestone’ in the long run, the company said in a statement. Coty’s shares rose as much as 4.9 per cent to USD12.49 in New York following the announcement. They had already ascended 82 per cent this year. The majority acquisition of Kylie Cosmetics by Coty will take place in 2020.
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