Overpaid? Kylie Jenner sells 51% of her cosmetics company for $600m amid beauty sales slump

Kylie Jenner founded Kylie Cosmetics when she was just a teen.

Bloomberg has observed that Coty Inc just turned into Koty Inc. The American beauty group controlled by Germany’s billionaire Reimann family has agreed to pay $600 million for a majority stake in the cosmetics brand, Kylie Cosmetics, founded by Kylie Jenner, who is the youngest member of the Kardashian-Jenner clan.

The deal, in which Coty will acquire a 51% stake, values Jenner’s Kylie Cosmetics business at about $1.2 billion, not bad for the line of lip kits the reality TV star created when still a teenager.

The New York Post writes that for the four-year-old cosmetics brand, “the deal comes amid a nationwide slump in makeup sales, which had some Wall Street analysts Monday questioning whether Coty overpaid”.  

“The acquisition [price] is higher than we’ve seen for other consumer related acquisitions,” Instinet analyst, Michael Baker told The Post.

The Post continues, “Indeed, the nine-figure deal comes at a time when beauty companies from Estee Lauder, Loreal, Elf and Sephora are complaining about sagging sales of colour cosmetics, including blush, eye shadow and lipstick — a product on which Jenner has staked her brand with her lip kits.

Coty’s chief executive Pierre Laubies on Monday insisted that Kylie Cosmetics is immune to the trend, saying sales of Kylie Cosmetics have grown 40 per cent this year. Laubies added that her new skincare line launched in May has been a big driver. But skincare products in general have been rising, prompting financial analysts to blast Laubies response as “vague”.

“Management was vague on the sales of the brand,” Morningstar analyst, Rebecca Scheuneman told The Post. “Information about consumer purchases of the brand was not forthcoming.”

Further, the Post writes that Analysts also pointed out that Coty said the youngest member of the Kardashian-Jenner clan generated sales of $177 million over the past year, Coty said — far less than previous media reports on the brands’ sales. Forbes, for example, estimated sales at $360 million for 2018, and CNBC said it was $420 million in 2017. The Post reported earlier this year that Kylie Cosmetics saw a 14 per cent sales decline through May, according to data from Rakuten Intelligence.