Kim & Coty: Kim Kardashian Moves to Reclaim Coty’s Stake in SKKN BY KIM

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While she may serve up plenty of bikini-clad, in-repose social media posts, no one could ever accuse Kim Kardashian of resting on her laurels. In fact, it’s the rare week that passes without news of some major professional venture or milestone, whether it’s launching the private equity firm SKKY Partners or hitting the $4 billion valuation mark for Skims, her “solutions for every body” range of undies and loungewear.
The prevailing wisdom is that Kim Kardashian wants to own her beauty brand outright because she intends to push into additional product categories – presumably while out from under the watchful eye of Coty.

The Gold Standard

Kardashian’s business dealings are so Midas-touch, that recent news she’s attempting to buy back the 20 percent stake Coty owns in her beauty brand triggered an avalanche of not particularly fact-rich press reports. In the absence of a stated rationale for the move from Kardashian herself, the prevailing wisdom is that she wants to own her beauty brand outright because she intends to push into additional product categories – presumably while out from under the watchful eye of Coty. Purchased for $200 million in late 2020, at a time in which the brand was called KKW Beauty, it included makeup and fragrance and was valued at $1 billion, Coty’s 20 percent stake paled in comparison to the $600 million the French American beauty giant spent acquiring 51 percent of sibling Kylie Jenner’s beauty business in 2019. Still, even for the publicly traded Coty, which has a current market cap of $10.70 billion, $200 million isn’t pocket change. Interestingly, Coty shares headed slightly north after the most recent Kardashian news broke in early July. And while we’re on the topic of speculation, I’ll venture to posit that that uptick is tied to the mountain of debt the company is still saddled with eight years after acquiring 43 brands from P&G for a staggering $12.5 billion. After all, if Kardashian ponies up more than the $200 million Coty paid for the stake in her beauty business – and presumably she would – that would help ease the sea of red ink attached to that monster P&G acquisition. But here’s where I’m about to go out on a pundit/industry-watcher limb: I think Coty might also be amenable to selling its stake in SKKN BY KIM back to Kardashian because the “celeb thing” doesn’t align with its current and future direction. Ever since Sue Y. Nabi came on board as CEO in 2020, the company has appeared to be moving away from personality-driven beauty and leaning harder into sustainable, tech-forward skincare and prestige scent.

Diving Deep into Microbiome Skincare

Clearly, pricey, sustainable skincare with an emphasis on microbiome protection is an obsession of Nabi’s. In 2014, while still at L’Oréal (Nabi had a 20-year run at the beauty behemoth, culminating as president of Lancôme), she co-developed Orveda, a brand steeped in microbiome and pre-biotics technology. Although Nabi sold her stake in Orveda when she joined Coty, her new employer promptly licensed the buzzy brand in 2021. And today, not only is Nabi’s Orveda co-founder Nicolas Vu still in place as CEO, but Coty also has major aspirations for the award-winning, “genderless” and kind-to-the-planet brand. This past May, in an elaborate press event for 100 beauty editors and VIPs timed in conjunction with the Cannes Film Festival, Nabi presented the latest Orveda offering: a serum with the over-the-top name OmniPotent Concentrate. Steeped in the brand’s microbiome technology, the new potion is, per Nabi herself, “perhaps the most potent serum of all time.” According to Vu, OmniPotent, which makes its debut in August, “sits at the crossroads of scientific innovation in the areas of microbiome and cellular longevity.” Without question, microbiome support is one of, if not the, most dynamic trends in skincare right now, so Coty is smart to push deeper into that sector. Still, that’s hardly Nabi’s sole focus.

Infiniment Coty Paris and Azzedine Alaïa?

At the same Cannes event, dubbed “Coty Protopia,” Nabi and her team unveiled a raft of other ventures. On the commerce side is Infiniment Coty Paris, a premium scent range comprising 14 luxe fragrances set to make its debut in 2024. Ostensibly, it taps Coty’s 120-year olfactory heritage and is designed to compete with Collection Privée Christian Dior and Les Exclusifs de Chanel, a cache of 17 scents crafted to tell the story of Gabrielle “Coco” Chanel’s life. Other initiatives appear to be more focused on building Coty’s rep as philanthropic and community-minded. In the official corporate press release, Coty Protopia is described as “a new approach to power beauty through cutting-edge innovation and science, underpinned by the company’s commitment to sustainability and new art.” As such, Coty announced an alliance between Orveda and the Azzedine Alaïa Foundation to sponsor aspiring fashion designers from across Africa and Asia, as well as a venture between Infiniment Coty Paris and 1-54 Contemporary African Art Fair to spotlight contemporary African art.

The Payoff

If all these activities sound both high-concept and high-end, that’s by design. And so far, Nabi’s deeper push into prestige – and away from celebrity-driven products — is paying off. As of March 31, aka Q3 of Coty’s fiscal year 2023, its Prestige beauty division had climbed to 62 percent of Coty’s total sales, while its Consumer brands (Covergirl, Rimmel, Sally Hansen, etc.) accounted for the balance. Operating income for Prestige was $102.4 million in Q3, up from $83.8 million at the same time last year. Where it gets confusing: Both SKKN BY KIM and Kylie Cosmetics are under Coty’s Prestige umbrella. But if Kim Kardashian proves successful in her quest to buy her brand back — and given her track record, she probably will – Coty will have that much more bandwidth for projects like Orveda and Infiniment.

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