Keeping Up With KKW Beauty (Kim Kardashian West)

You might have heard about the beauty brand KKW Beauty, the brainchild of Kim Kardashian West. She founded it in June 2017. It started from selling $48 crème contour kits and has now expanded to a whole range of beauty products, from blushes to lip liners to palettes to perfumes, and many more.

But Kim is not the only one; her half-sister, Kylie Jenner, also has her beauty line, titled Kylie Cosmetics. Both of these brands are well known in the ever-growing beauty industry. Seeing the same potential and growth, fashion giant Coty decided to invest in both of these brands.

What Is Happening in 2020?

Coty Inc. is an American multinational beauty giant that was founded in 1904 by Francois Coty. It is a well-known name in the fashion and beauty industry. By the year 2018, Coty owned around 77 brands.

So, a giant like Coty has been selling beauty products ranging from hair products to cosmetics to perfumes, and many more. What’s in this deal for them? That’s a question one has to ask since they have recently signed a contract with both companies, KKW Beauty and Kylie Cosmetics.

Coty might be an old name, but it has been struggling on lots of fronts in recent times. One of them is the constant issues with Wall Street, which has insisted that Coty is routinely overpaying for acquisitions.

But the major issue is that Coty has not been able to keep up with the latest
contemporary beauty trends. In the ever-changing beauty industry, where the
trends change with every season, it is the biggest mistake not to keep up with the trends.

We have seen the success of Kylie Jenner and Kim Kardashian. They can come up with new creative trends every season and are very active on social media. They are household names, and that sticks with their brands.

Kim Kardashian has more than 300 million social media followers, which Coty has said will be useful for “products and communications initiatives”. 

This is also why Coty has given Kim complete creative control on the line, and will only be focusing on expanding product development outside of the color cosmetics space.

Such deals will help refresh Coty’s image and increase its customer reach to the younger generation. This is a very much needed rebranding.

This 116-year-old company has also taken a massive hit because of the pandemic. Since 2020’s beginning, their stock prices have plummeted by nearly 60%. Until June 2019, the company earned revenues up to $8.6 billion, which is now $3.3 billion only in market capitalization.

After this deal, their stock prices showed a sharp increase of 13.4% to $4.74. It lost 57.9% year to date before.

Apart from this, recently, in June, Coty fired CEO Pierre Laubies and replaced him with chairman Peter Harf. This is their fourth executive CEO in a matter of four years. This indicates that there is some internal instability in the company.

What Is the Big Deal?

Coty Inc. Acquired a 20% stake in KKW Beauty in an incredible $200 million deal. This puts the valuation for KKW Beauty at $1 billion- slightly less than Kylie’s beauty line, which is $1.2 billion from the deal. This deal makes Kim Kardashian West worth $900 million.

This deal will close in the third quarter of the financial year 2021. After the deal, Kim Kardashian West will still have a majority share of 72% in the company.

There have been few estimates by Forbes, which gives a rough idea on other stakeholders of KKW Beauty. They estimate that Kris Jenner, Kim’s mother, owns 8% of the business.

Kim founded KKW Beauty in 2017. This was done in a successful collaboration with Kylie Cosmetics. Kim’s brand first launched online-only, and later moved on to retail stores.

Apart from this, Kim has many business ventures. One of which is her reality show, titled ”Keeping Up with the Kardashians”. It has been ongoing since 2007 and exists to the present day, running for the 19th season.

As for Kylie Cosmetics, Kylie sold 51% of the company’s shares to Coty Inc., which gives a valuation of $1.2 billion to the company. This made Kylie’s net worth be just under $900 million.

Such deals and valuations make a lot of sense in today’s context. Other brands like Anastasia Beverly Hills, Huda Beauty, and Glossier have also received high
valuations because of their social media friendliness and access to a vast younger generation base.

Written by - Srishti Purohit

Edited by - Sandhya R