Admittedly it was a very \”Barbie In Her Beauty Bubble\” stance to take, but this was my first thought when Forbes dropped its \”Kylie Jenner fooled us about her billionaire status\” bombshell: Wait — by Forbes\’s calculations she\’s worth $900M? That\’s so close!
But then I remembered that old saw about horseshoes and hand grenades – and this little thing called shareholders – and I knew I had to do some serious digging and reading to understand the ramifications for all parties involved.
If Coty overpaid for its 51 percent stake of Kylie Beauty in January 2019 — and that was the position of multiple industry analysts at the time — it absolutely, if unwittingly, did wrong by the individuals who own its stock.
[callout]“The accusations that the Jenners, and/or their accountants, falsified tax returns and then lied about their 2016 revenues for the last four years, are absolutely false,” says the document sent to Forbes by the Jenners’ representatives.[/callout]
But if Coty\’s $600M outlay was informed by sketchy math and falsified documents provided by perhaps the biggest stage mom the world has ever known, that\’s another story entirely.
A Lose/Lose/Lose Scenario
No matter how you parse it, everyone looks bad in this scenario: Forbes and Coty for not doing sufficient due diligence, and Kris and Kylie Jenner for being so keen on claiming the \”self-made billionaire\” mantle that they were (allegedly) willing to massage the numbers to make Kylie Beauty appear bigger than it actually is.
Without question, Forbes is making serious, zeitgeisty lemonade out of its misstep in slapping Kylie Jenner on the cover of its August 2018 issue paired with the headline \”America\’s Women Billionaires.\” Not only is there a new, massive story on the magazine\’s website unpacking the brouhaha in excruciating detail (\”Inside Kylie Jenner\’s Web of Lies – And Why She\’s no Longer a Billionaire\”), there\’s also a scorched-earth four-minute video to accompany it, in which Forbes Deputy Wealth Editor Chase Peterson-Withorn doesn\’t exactly shy away from the word \”lie.\”
I\’ve watched the video multiple times, and with each go-round my jaw drops a little further. It\’s just so….damning. \”For years [Kylie Jenner] has lied and exaggerated just how successful she really is,\” Peterson-Withorn shares. Later, after facts-and-figures input from a reporter colleague, he pops back in with more palace intrigue. \”While we can\’t prove that those tax returns the Jenners sent us were fake, we\’re pretty sure now that they were.\”
And then this: \”Regardless, it\’s clear that for years the Jenners have been lying.\”
Kylie Jenner had plenty to say when the billionaire-status scandal broke. \”What am i (sic) even waking up to?\” she tweeted the morning after. \”i (sic) thought this was a reputable site…all i (sic) see are a number of inaccurate statements and unproven assumptions lol. i\’ve (sic) never asked for any title or tried to lie my way there EVER.\”
A follow-up Jenner tweet dialed back on the \”lol\” vibe: \”\’Even creating tax returns that were likely \’forged\’ that\’s your proof? So you just THOUGHT they were forged? Like actually what am i (sic) reading.\”
The Web of Lies War Rages
Officially, rebuttal from the Jenner camp was far more anemic. At the end of May, Forbes, in an addendum to the \”Web Of Lies\” piece, maintains it was sent a letter attesting to the veracity of the tax returns in question. \”The accusations that the Jenners, and/or their accountants, falsified tax returns and then lied about their 2016 revenues for the last four years, are absolutely false,\” says the document sent to the magazine by the Jenners\’ representatives.
For Coty, the Forbes attack on the biggest star in its portfolio comes at a most inopportune time. Not only is it in the process of offloading the bulk of its professional business (including the Wella, Clairol, OPI and GhD brands) to KKR, it\’s been struggling mightily with some of the acquisitions it picked up in an ill-advised 2016 spending spree. (For background on Coty\’s whopper $12.5 B purchase of 43 Procter & Gamble brands — several in the struggling celebrity fragrance sector, read this.)
Even before its stock took a 10 percent hit the day after the new Forbes piece dropped, the picture was far from rosy for the Amsterdam-based global beauty powerhouse. In 2018, after the dust had settled on its two-year-old mega acquisition of CoverGirl, a raft of scents and Wella (the latter of which it\’s now flipping to KKR), its stock had plummeted nearly 70 percent. Yes, there have been more recent market upticks for the corporation, including a nice bump after the KKR deal was announced. But toss this year\’s pandemic into the mix, and Coty is facing an uphill battle.
The C-Suite Scramble
Understandably, there\’s been quite a bit of recent scrambling in Coty\’s C-Suite. Just months after it appointed former Douglas honcho Christophe Honnefelder as CEO of Kylie Beauty (which comprises Kylie Cosmetics and Kylie Skin) — a role he never actually stepped into, citing personal reasons — it placed Coty insider Simona Cattaneo at the helm.
Cattaneo will report into Peter Harf, who is now CEO as well as Chairman, a move that happened in June and was meant to telegraph stability as the KKR deal is being pushed through. For now at least, it seems Coty\’s doubling down on all things Jenner and Kardashian; the year-old Kylie Skin brand just made its European debut at 2000 Douglas Group doors in 25 countries, and there are multiple reports (although no official confirmation) that the company is in talks with Kim Kardashian West about a possible collaboration.
Though none of us has a crystal ball, it\’s pretty clear that Team Jenner will come out of this whole mess fairly unscathed. Is it ideal to have a respected business publication publicly accuse you of being so desperate to climb to the top of its vaunted annual power rankings that you would \”lie\” and \”forge\” tax documents? Of course not. But at the end of the day, this wily, telegenic — and let\’s give props where props are due — business-savvy family is still insanely wealthy.
The day after Forbes publicly bounced her from the billionaires club, Kylie Jenner tweeted that there were \”100 things more important right now than fixating on how much money I have.\”
That\’s a good point, especially given the more immediate gut-wrenching racial turmoil of the last few weeks. But with the pandemic, stock portfolios have generally been in freefall. As such, Coty shareholders might not be feeling quite as \”whatever\” about how much Kylie Jenner — and her beauty brand — are worth.