This is Part III of an ongoing series on the rise and evolution of Kylie Cosmetics. Read Part I and Part II.

In Part II of our ongoing series on Kylie Cosmetics, we wrote about the recent announcement that the brand would start selling in Ulta this holiday season. We concluded that while the move is clearly beneficial for Ulta, it exposes the potential slowdown of Kylie’s online only sales.

The brand’s sales estimates paint a mixed picture. They were $307 million in 2016, a roaring beginning for a new brand. In 2017, they were $330 million, according to Forbes, likely slowing because of Kylie’s social media hiatus during her pregnancy. This estimate is short of the $386 million cited in a WWD piece in August 2017, which would mean the brand missed its projection.

Recently, in an interview at Code Commerce, Shopify CEO Tobi Lutke said that in the past two and a half years, the brand has seen $900 million in revenue. Lutke is privy to the brand’s numbers because it runs on Shopify, the ecommerce platform Kylie Cosmetics is built on. If this number he reported was accurate, it would mean that the brand’s sales in the first half of 2018 were $263 million (annualized from $900mm in 2.5 years and using the 2016 and 2017 estimates above). Pressed about his assertion, Lutke later said he was just quoting from the aforementioned Forbes article. However, the article said the company was valued at $900 million, not that it had revenue of $900 million—a large difference.

This is where things get confusing.

Let’s assume for a moment that Lutke misspoke in his attribution, but unintentionally revealed 2018 revenue numbers. That would mean sales have picked up considerably in 2018, right as the brand goes into Ulta. Let’s also assume the brand does 60% of its revenue in the second half of the year, which would mean it made $267 million in Q1 and Q2 (the cited $900 million minus 2016 numbers and the low estimate for 2017 revenue) and then will make a projected $657 million for Q3 and Q4 in 2018 (60% of annual sales). This would mean the brand would have $920 million of revenue in 2018, a truly staggering number and likely one that is implausible for online-only sales. However, if these numbers somehow include the Ulta purchase orders, they become much more believable, but it’s unclear why Shopify would be privy to this information.

The other scenario, if Lutke truly did mispeak and confuse valuation for revenue, is that Kylie’s online numbers are relatively flat for 2018, further encouraging the move into Ulta. There’s one more data point that makes this seem plausible: Kylie’s growing use of promotions and discounts to drive sales. Going back through the brand’s 4,600 Instagram posts (I highly recommend it), paints an interesting picture.

2016

  • September 12: Free U.S. shipping for 24 hours
  • October 31: Free Kymajesty Metal Lipsticks with every purchase
  • November 25: Free gloss with Lip Kit purchase
  • November 28: 20% off sitewide for Cyber Monday
  • December 7: The Holiday Box ships free internationally  
  • December 11: A free keychain with every purchase

2017

  • June 27: 20% off the Koko Kollection for one day, likely to clear out inventory
  • October 31: Halloween flash sale for one hour, 50% off specific products
  • November 22: Free worldwide shipping for 24 hours  
  • November 26: 30% off sitewide for Cyber Monday

2018

  • June 15: Free shipping for a weekend
  • September 1: Buy one Lip Kit get one free for 48 hours
  • September 29: Get a free makeup bag on orders over $40
  • October 30: 40% off on a range of items for 24 hours

The discounting and promotional cadence above shows that in the past year, the brand has accelerated its promotionality. Cyber Monday offered a 20% discount in 2016 but a 30% discount in 2017. In 2016 and 2017, there was only one promotion in September, but there have already been two in 2018 during the same period. With the holidays still to come, the easiest signal from these moves is that the brand is becoming more aggressive to boost sales, but at the cost of eroding its full-price sales, a sign of falling organic sales. The brand’s slowing earned media value (EMV) in the first half of 2018 substantiates this: According to Tribe Dynamics, Kylie consistently ranked in the top 20 brands in terms of EMV throughout 2017. But today, it’s fallen just outside of that top-20 bracket, with $98.6 million EMV.

These two data points suggest more clearly that the brand isn’t in turbo as the Shopify-projected numbers would suggest, but rather is still trying to figure out how to grow online at such a big scale. The holiday season will be telling, especially as the brand opens up in Ulta, and tries out what a dual channel business can offer—both the positives and the negatives. At the same time, Fenty’s department store-first distribution strategy turns one, as Rihanna tours the world promoting the brand’s first birthday. Kylie Cosmetics’ strategy is growing closer to Fenty’s by the day.

Editor’s note: This piece has been updated to account for additional discounts made on Kylie Cosmetics products.