How Kylie Jenner earned $600 million

Multinational beauty corporation Coty has announced that it will pay $600 million (A$882 million) for a majority stake in Kylie Jenner's make-up and skincare businesses, Kylie Cosmetics and Kylie Skin.

The acquisition is part of Coty's strategy to tap into the reality TV star and social media phenomenon's massive online reach and is expected to drive company shares up by 5 per cent.

 

Kylie Jenner visits Houston Ulta Beauty to promote the launch of Kylie Cosmetics. Picture: Rick Kern/Getty Images for Ulta Beauty
Kylie Jenner visits Houston Ulta Beauty to promote the launch of Kylie Cosmetics. Picture: Rick Kern/Getty Images for Ulta Beauty

The move comes as the cosmetics giant, which is also the owner of the CoverGirl brand, strengthens its commitment to skin care while attempting to combat declining sales.

The deal aims to be a long-term strategic partnership that will jointly build and further develop Jenner's existing beauty business, taking it to the next level globally.

Coty and Kylie will work together, focusing on global expansion into new beauty categories and markets.

Kylie Jenner‘s product seen in an Ulta Beauty location in Houston, Texas. Picture: Getty Images
Kylie Jenner‘s product seen in an Ulta Beauty location in Houston, Texas. Picture: Getty Images

Jenner and her team will continue to lead all creative efforts in terms of product and communications, capitalising on her matchless social media influence as a digital native.

Jenner has over 270 million followers across her personal and brand social media channels, as well as being one of the most influential voices among beauty consumers. Kylie Cosmetics and Kylie Skin are two of the fastest-growing and most-engaged beauty brands on social media.

Jenner, the youngest sibling of the wildly successful Kardashian family, started her makeup line with lipstick kits in 2015.

Kylie Jenner started Kylie Cosmetics with lipstick kits in 2015. Picture: Instagram
Kylie Jenner started Kylie Cosmetics with lipstick kits in 2015. Picture: Instagram

The kits sold out within minutes of their launch.

Coty said Kylie Cosmetics had an estimated $177 (A$260 million) in net revenues over the past 12 months.

Last year, Jenner brought in sales of an estimated $360 million (A$529 million), according to Forbes, putting her on its list of self-made billionaires.

"Kylie is a modern-day icon, with an incredible sense of the beauty consumer, and we believe in the high potential of building a global beauty brand together," said Peter Harf, chairman of Coty's board.

Kylie (l) is one of the phenomenally successful Kardashians. Picture: Supplied
Kylie (l) is one of the phenomenally successful Kardashians. Picture: Supplied

The transaction is also a step in Coty's ongoing transformation from a 115-year-old empire into a more focused and digitally agile company.

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

Business Wire reported Jenner announced: "I'm excited to partner with Coty to continue to reach even more fans of Kylie Cosmetics and Kylie Skin around the world.

"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," said Jenner who announced on Instagram her beauty collection for Christmas.

 

 

"This partnership will allow me and my team to stay focused on the creation and development of each product while building the brand into an international beauty powerhouse."

What does Coty get for $600 million? Exactly 51 per cent ownership in the partnership - and the expectation that revenue will grow across its coreportfolios by more than 1 per cent in the next three years.

All Coty and Kylie beauty categories within the new partnership will continue to be sold through leading beauty retailers as well as owned digital channels.

 

You Are The Sun High Gloss makeup by Kylie Cosmetics
You Are The Sun High Gloss makeup by Kylie Cosmetics