Kim Kardashian in talks with Coty to buy back minority stake in SKKN by Kim
13 Jul 2023 --- Kim Kardashian is reportedly seeking to buy back her minority stake in beauty brand SKKN by Kim, three years after it was sold to Coty.
While the final sale price of the deal is unknown, speculations are that it will be lower than what Coty originally paid for the reality star’s 20% stake in her business in November 2019 (US$200 million), which valued the company at US$1 billion.
Multiple media sources report that talks are currently underway between Kardashian and Coty.
“Debt pay-down is a priority for Coty and the repurchase could help accelerate deleveraging efforts,” Ashley Helgans, VP of investment banking company Jeffries, remarked in a note sent to clients last Tuesday.
Jeffries believes the funds may be channeled into more strategic acquisitions like “strategic” growth brands.
Inherent risks of celebrity brands
Kardashian was named on Forbes’ billionaire list in 2021, with her success attributed to the performance of both her beauty firm and shapewear brand Skims. She currently has more than 362 million followers on Instagram.
SKKN by Kim skin care line was formulated with experts at Coty.SKKN by Kim skin care line was formulated with experts at Coty, created to be fit for “all skin types, tones, and textures at every stage of maturity.”
But Helgans at Jeffries alludes to the “unique set of constraints” surrounding the cult of celebrity brands, stressing that their repeat purchase rates tend to be lower than traditional brands.
“Beauty trend cycles typically last seven years (four years of growth; three moderation),” she underscores.
“The number one driver of cycle upswing is innovation/newness. Celebrity beauty brands tend to peak earlier (one to two years) and moderate faster (one to two years) than traditional beauty trend cycles.”
“The challenge for celebrity brands is to convert trial and initial enthusiasm into longer duration loyalty, regimen consistency and replenishment purchases.”
Eyeing future business development
Coty, under the deal, would be the line as a global brand by developing hair care, personal care, skin care and nail products. This reflects the business expansion activities of Kylie Cosmetics, which was launched by Kardashian’s younger sister Kylie Jenner back in 2014.
Coty assimilated Jenner’s business in November 2019, through purchasing a US$600 million majority stake.
According to recent evaluations, Coty’s stock witnessed a run-up in its shares to around 50% year-to-date, nearly 70% compared to last year.
By Benjamin Ferrer
