Kim Kardashian is reportedly in talks to buy back the minority stake beauty conglomerate Coty (COTY) purchased in her beauty company SKNN by Kim three years ago.
The talks are still ongoing, according to The Wall Street Journal, and it's unclear what the sales price would be for the stake, although it would likely be lower compared to what Coty initially paid.
The French-American conglomerate completed its 20% stake purchase in Kardashian’s company, formerly known as KKW Holdings, for $200 million back in January 2021. That valued the brand at a whopping $1 billion.
As part of the partnership with Coty, Kardashian launched SKNN by Kim, a nine-step, high-end skincare line, in June of last year. The complete collection includes ingredients like hyaluronic acid, vitamin C, niacinamide, and shea butter and costs a whopping $575, though individual products are available separately for less.
The Journal said Kardashian wants to buy back Coty’s stake in order to expand SKKN’s beauty categories, although the move could benefit Coty as well, according to one analyst.
"Debt pay-down is a priority for Coty and the repurchase could help accelerate deleveraging efforts," Jefferies analyst Ashley Helgans wrote in a note to clients on Wednesday, adding the money could also be used for more strategic acquisitions like "superior" growth brands
Helgans also noted celebrity brands come with their own unique risks: "Beauty trend cycles typically last 7 years (4 years of growth; 3 moderation); #1 driver of cycle upswing is innovation/newness. Celebrity beauty brands tend to peak earlier (1-2 years) and moderate faster (1-2 years) than traditional beauty trend cycles."
"Celebrity brands face a unique set of constraints in that the repeat purchase rate is lower than a traditional brand. The challenge for celebrity brands is to convert trial and initial enthusiasm into longer duration loyalty, regimen consistency and replenishment purchases," the analyst continued.
Coty stock has had an impressive run-up with shares up about 50% year-to-date and nearly 70% compared to last year. The company did not immediately respond to Yahoo Finance's request for comment on the report.
Kardashian's billion-dollar empire
Kardashian, who boasts more than 362 million followers on Instagram (META) alone, has a successful track record as both a business owner and investor.
Kardashian first joined Forbes' coveted billionaire list in 2021 with the outlet citing her beauty line, along with loungewear company Skims, as catalysts for her billionaire status.
Skims saw a boom in sales amid the pandemic, as consumers gravitated toward comfier, at-home clothing options. Kardashian owns a majority stake in Skims, and while the financials of the company have not been disclosed, Forbes reported that the brand raised $240 million in its latest funding round last January, thus resulting in a valuation of $3.2 billion.
Kardashian also receives extra cash from her former reality series "Keeping up with the Kardashians" and endorsement deals.
At the end of 2020, the famous family signed a multiyear deal with Hulu (DIS) for a rebooted reality series "The Kardashians," providing yet another steady flow of income.
Alexandra is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal and email her at alexandra.canal@yahoofinance.com
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