Beauty brand Coty announced on Monday that it will buy a major stake worth $600 million in model and reality star Kylie Jenner's cosmetic line Kylie Cosmetics. The strategic partnership will be an all cash deal.
Jenner, who is the youngest of the popular Kardashian clan, and Coty will work together on her cosmetic brand and decide on the cosmetic line's strategic direction, with the aim of global expansion and entry into new skincare and beauty categories. Besides, Coty will also be the licensee for Jenner's skincare, fragrances and nail products.
Coty's decision to buy a major stake in Jenner's brand is with the aim of cashing in on the huge social media reach of Jenner, who commands a whopping 270 million followers on social media. The announcement of the deal saw Coty's shares jumping 5%.
Understandably, Coty plans to tap these fans as its potential customers, with the aim of reorganizing its product line. According to Bloomberg, as part of the deal, the cosmetic giant will be responsible for the overall portfolio, while Jenner will be overseeing the brand's creative efforts and communications.
Jenner, who is only 22, launched the cosmetic line when she was 15. The line initially offered lipliner and lipstick kits. However, the brand has over the years expanded with many turning loyal to the brand.
Coty tries to reorganize
Coty also said that Kylie Cosmetics made an estimated $177 billion in revenues in the last 12 month. The partnership is likely to do more good to Coty than Kylie and might turn out to be milestone in its transformation strategy.
Moreover Coty has been under pressure for the last few months to revamp its brand. The company earlier this year took a $950 million writedown on the Procter & Gamble brands that it bought in 2015.
Also, the company has been spending a lot on marketing to control its declining sales in recent times. Not only Coty, in recent times a number of fashion and cosmetic brands have been on an acquisition spree and are trying to strike deals with beauty product brands by young models in order to tap the social media followers.
Lately, Louis Vuitton has been trying to acquire Tiffany's, while Estee Lauder also bought its remaining two-thirds stake in Korean skin-care company Have & Be Co.