Coty Inc. has closed a deal to acquire 20 percent of Kim Kardashian West’s beauty business, KKW Beauty, for $200 million.
The deal was originally unveiled in June. Coty plans to bring KKW beauty into new categories, including skin care, which is slated to launch in fiscal 2022.
“Kim shares our true passion for beauty products, and this acquisition allows us to leverage our respective strengths for mutual benefit and value creation,” said Coty chief executive officer Sue Nabi in a statement. She expects Coty will bring scientific knowledge around formulation to the table, while Kardashian West will bring a massive following — she has 197 million followers on Instagram alone.
“She has a unique ability to read the latest beauty and wellness trends, while we have the expertise on global product positioning, access to a vast global distribution network, and the resources to enter new beauty categories,” Nabi continued.
Kardashian West and her team are meant to lead creative efforts around products and communications, while Coty will focus on developing skin-care, hair-care, personal-care and nail products for the brand.
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The arrangement is similar to the one that Coty struck with Kardashian West’s sister, Kylie Jenner.
Coty bought a 51 percent stake in Jenner’s business, Kylie Cosmetics, for $600 million. So far, it has started rolling out Kylie Skin in European retail and developed e-commerce operations for several major global markets. Last quarter, skin-care alone did $25 million in sales.
For Coty, betting on the Kardashian-Jenner family provides a means of accelerating the direct-to-consumer business, a key focus for Nabi as she tries to turn around the business.
Coty has struggled since it bought 41 beauty brands from Procter & Gamble in 2016. The business has had a revolving door of CEOs and failed to turn around brands like Cover Girl that arrived in worse condition than expected. The most recent quarter — four years after the deal closed — marked the first time in five years that Cover Girl did not lose shelf space in major U.S. retailers, for example. Under Nabi, who joined Coty in September, that brand will lean into the clean makeup trend.
Nabi’s vision also includes accelerating skin care with Kylie Skin, KKW and Orveda, a brand she founded that Coty acquired after she joined the company, and focusing on making good products.
She leads a business that despite recent acquisitions, is leaner than before. Recently, Coty closed a deal to sell a majority position in professional beauty lines Wella, OPI and Clairol to a joint venture run by private equity giant KKR with plans to use the $2.5 million in cash proceeds to pay down debt. The business also sold off a majority stake in direct-seller Younique that it had picked up under former CEO Camillo Pane.
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