Date
6 December 2019
Coty is banking on reality TV star Kylie Jenner’s more than 270 million social media followers to attract a younger audience. Photo: Reuters
Coty is banking on reality TV star Kylie Jenner’s more than 270 million social media followers to attract a younger audience. Photo: Reuters

Coty takes US$600 million bet on Kylie Jenner’s beauty brands

Coty Inc. said it will pay US$600 million for a majority stake in Kylie Jenner’s make-up and skincare businesses, as it looks to tap into the reality TV star’s huge social media reach, Reuters reports.

One of the cosmetics world’s older names, Coty is seeking to revitalize sales on the back of its broad global distribution and is banking on Jenner’s more than 270 million social media followers to attract a younger audience.

Jenner, 22, the youngest sibling of the wildly popular Kardashian-Jenner clan, a household name a decade after their reality TV show Keeping Up With The Kardashians became a smash hit, started her make up line with lipstick and lip liner kits in 2015.

The kits sold out within minutes of launching, an early sign of her power as a social media influencer, and Coty said Kylie Cosmetics had an estimated US$177 million in net revenues over the past 12 months.

Forbes, making her the youngest self-made billionaire on its 2018 list, said Jenner’s line of cosmetics brought in sales of an estimated US$360 million in 2018.

Coty will hold 51 percent of Jenner’s business, valuing her company at about US$1.2 billion.

“Kylie is a big brand in beauty today. She’s very influential … [but] Coty remains financially leveraged,” D.A. Davidson retail analyst Linda Bolton Weiser said.

Celebrities, including Jenner, are leveraging their huge social media following to launch their cosmetics and lifestyle brands and compete with established players in the market.

Social media-powered beauty brands such as Glossier, Jessica Alba’s Honest Beauty and Huda Beauty have all notched up about US$1 billion in valuation, according to media reports.

“I look forward to continuing the creativity and ingenuity for each collection that consumers have come to expect and engaging with my fans across social media,” Jenner said in a statement.

Coty has been doubling down on its skincare and fragrance products, rolling out new luxury fragrances and lipsticks, while spending more on marketing to combat falling sales.

The company, which is majority owned by German conglomerate JAB Holdings, has struggled to integrate about 40 beauty brands, including Covergirl and Max Factor, that it bought from Procter & Gamble in 2016, forcing it to take billions of dollars in writedowns and outline a four-year restructuring plan.

The partnership will add to Coty’s net revenue growth of its core fragrance, cosmetics and skin care business by more than 1 percent per year over the next three years, the company said.

The deal is expected to close in the third quarter of fiscal year 2020, Coty said.

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