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Is Coty About to Repeat Its Mistakes With Kim Kardashian West?

By Jennifer Saibil – Jun 4, 2020 at 8:55AM

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It's starting a collaboration with the social media influencer as it tries to recover from earlier mistakes.

Coty (COTY -1.71%) has already had a lot going on this week, after selling off a chunk of its Wella haircare business to KKR (KKR -0.69%) and undergoing a management overhaul. In a filing on Tuesday with the Securities and Exchange Commission, the once-powerful beauty brand said it was in talks with reality TV celebrity Kim Kardashian West to develop a cosmetic brand. Is that the right move for a company in turmoil?

Keeping up

Back in January, Coty completed a 51% purchase of Kyle Cosmetics --  which was founded by Kardashian West's sister, Kylie Jenner -- for $600 million. This was a move to refresh the company's cosmetics offerings, which have been going a bit stale as consumers move toward luxury and trendy brands. However Forbes disclosed last week that the value of Kylie cosmetics may have been inflated. The news sent Coty's stock price down.

Woman checking out makeup.

Image source: Getty Images.

In the meantime, makeup sales overall have given way to skincare lines as the next big thing. In the filing, Coty said it is "currently engaged in discussions with Kim Kardashian West regarding a possible collaboration with respect to certain beauty products," leaving all possibilities open.

All in the family

According to Bloomberg, returning CEO Peter Harf said he's "good friends" with Kardashian West and Jenner's mother and business manager, Kris Jenner. In a conference call with investors he noted that the sisters were "big influencers" on social media.

Coty is heavily investing in Kylie cosmetics and its skincare brand, which has already launched in Europe. Kardashian West already has a body-slimming product business called Skims. 

Coty shares were up based on the news.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool recommends KKR. The Motley Fool has a disclosure policy.

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Coty Inc. Stock Quote
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