Get ready for a big, bold new entrant in travel retail. Kylie Cosmetics seems sure to become a force in the channel after US beauty house Coty revealed that it is acquiring a 51% interest in the Kylie Jenner-owned brand for US$600 million.
The deal – expected to close in the third quarter of fiscal year 2020 – is part of the beauty house’s strategy to capture opportunities within the fast-growing ‘Gen Z’ audience.
Kylie Jenner is one of the world’s most influential beauty stars with over 151 million Instagram followers. Kylie Cosmetics, originally called ‘Kylie Lip Kits’, quickly rose to fame as Jenner used her own enormous social capital to promote her products. In the first 18 months after the brand’s launch in 2015, Kylie Cosmetics produced US$420 million worth of sales from its own website.
The majority investment in Kylie Cosmetics was originally considered in June this year as part of Coty’s overall restructuring of its beauty division.
As reported, the global beauty company is also looking at the possibility of divesting its Professional Beauty division as Coty seeks to reduce complexity and sharpen its focus on fragrance, cosmetics and skincare – its mainstay segments in the travel retail channel.
Commenting on the acquisition, Coty CEO Pierre Laubies said: “We are pleased to welcome Kylie into our organization. Combining Kylie’s creative vision and unparalleled consumer interest with Coty’s expertise and leadership in prestige beauty is an exciting next step in our transformation and will… allow Kylie’s brands to reach their full potential.”
Kylie Jenner added: “I’m excited to partner with Coty to reach even more fans of Kylie Cosmetics and Kylie Skin around the world. 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.”
Under the new agreement, Coty will use its research and development, manufacturing, distribution knowledge to expand Kylie Cosmetics globally. Travel retail is sure to be a priority given Coty’s sizable footprint in the channel and Kylie’s absence from it.
Meanwhile, Jenner and her Los Angeles team will remain active and continue to work on product development, social media marketing, and the daily management of her eponymous brand.
“What is special about Kylie is that her social reach is bigger than her business reach… a global partner like Coty can bring the brand to its potential” – Coty Chief Executive Officer Pierre Laubies, speaking to WWD
Coty plans to leverage Jenner’s online popularity and direct marketing success to further grow the beauty brand on the global stage. It also plans to expand Kylie Cosmetics’s product assortment to include some of Coty’s strongest beauty pillars including fragrance, colour, cosmetics and skincare.
In the last year, Kylie Cosmetics grew by +40%, bringing in US$177 million in net sales. According to Laubies, the Kylie Cosmetics business is expected to close with revenues of US$200 million this year, with the newly-launched Kylie Skin contributing US$25 million.
Laubies told influential US fashion, beauty and retail title WWD: “What is special about Kylie is that her social reach is bigger than her business reach… a global partner like Coty can bring the brand to its potential.”
Laubies also told WWD: “This transaction is part of closing our strategic gap. It will expose us to a more premium category… and give us the opportunity to do something that we are good at, which is to build global brands.”
