Coty’s Not KO’d by Kylie

The novel coronavirus did a number on a lot of business plans last year, including Coty's plan for Kylie Cosmetics. Pre-COVID-19, in November, 2019, Coty paid $600 million for the brand, which had sales of about $200 million—all with a limited ad budget and just a handful of employees. But when the calendar turned to 2020, so did Kylie's fortunes. According to the Wall Street Journal, sales of Kylie Cosmetics were hurt by COVID-related supply-chain disruptions.

What's worse, a lawsuit was filed in June by the private label manufacturer that makes and distributes Kylie Cosmetics products. In the suit, Seed Beauty LLC claims that it played a key role in fueling the company’s early success and alleges that Kylie Founder Kylie Jenner shared trade secrets with Coty as part of the deal.

Still, Coty Chairman Peter Harf has confidence in the brand, telling Wall Street analysts, “I personally think that this is a brand that could reach, I mean, hundreds of millions. It could very, very soon be the biggest brand we have.”

Harf has so much faith in the Jenner/Kardashian clan that in June, Coty said it would pay $200 million for about 20% of the makeup brand owned by Jenner’s reality-star sister, Kim Kardashian West, KKW Holdings LLC. And things are starting to look up. Coty said sales of Kylie Skin, which launched in early 2019 and includes face moisturizers, body scrubs and serums, tripled in the quarter that ended this October, compared with the same period a year earlier. Coty said Kylie Skin reached $25 million in sales in 2019.