The Coty brand is banking on Kim Kardashian to rescue them from the Kylie Jenner fallout. It may prove to be the brand's death knell.
Kim Kardashian is a savior. That is, of course, if you believe Coty, who recently announced that they’re teaming up with the wife of Kanye West to launch her brand of cosmetics on a global scale.
The company apparently learned nothing from the mistakes of their most recent past. And it seems Wall Street may not have learned either.
Last week, reports first emerged that Coty had sold off Wella haircare and overhauled its management team.
These moves had twin purposes: to provide a much-needed influx of capital and get rid of the problematic management in the wake of the Kylie Jenner fallout.
But returning Coty CEO Peter Harf, who is “good friends” with Kris Jenner, decided to bank on another Kardashian-Jenner horse — this time in the form of Kim Kardashian.
And after Harf made this announcement, Coty’s stock shot up.
But what makes this business move so incredible is how willing Harf was, once again, to hitch his wagon to the Kardashian-Jenner promotional machine.
After all, Forbes Magazine confirmed that Kylie Jenner “cooked her books” — that is, falsified her IRS tax returns — to show that her Kylie Cosmetics company was far more valuable than it really was.
When the fraud was discovered, Forbes issued a bombshell announcement confirming that they’d revoked Jenner’s billionaire status. And though Jenner denied Forbes’ claims, the fallout was swift: at one point, Coty’s stock plunged to a record low of $3.02.
Kim Kardashian has nowhere near the net worth of her baby sister. According to Forbes, Kardashian is worth approximately $350 million. But Kardashian’s husband, Kanye West, is allegedly billionaire, which potentially sets the stage for a hilarious case of deja vu.
And all of this makes Coty’s investment into Kardashian all the more curious.
Bank of America analysts think that Coty’s partnership with Kardashian is a wise one. They argue:
Overall, both the Kylie and Kim brands lost momentum for much of 2019, with declining volume of social media conversations and visits to their respective websites, but trends have accelerated in 2020.
The volume of social media conversations on Kylie Cosmetics is more volatile than KKW (larger peak to trough), but visits to their respective brand websites and absolute number of conversations is four-to-five times higher for Kylie than Kim in recent months.
But Coty’s partnership with Kim Kardashian is even riskier than their initial partnership with her younger sister.
We’ve already talked about how influencer culture is all but dead, and none other than Kylie Jenner dealt the death blow to the house of cards.
Jenner ranks among the most popular celebrities on Instagram, and look how that turned out. This makes reliance on Kim Kardashian’s (somewhat smaller) social media presence to relaunch the struggling Coty brand a foolish gamble, at best.
So it will be interesting to see if Kim Kardashian can really turn this all around — or if, as we have every reason to suspect, this will all fall to pieces in less time than it took for Kylie’s billionaire facade to crumble.
Disclaimer 6/10/2020: This article has been updated to reflect Kim Kardashian being ‘in talks’ with Coty on a cosmetics deal as a final contract is still pending.
Disclaimer: The opinions expressed in this article do not necessarily reflect the views of CCN.com.
Last modified: September 23, 2020 1:59 PM