This is Part VI of the Kylie Kronicles, our ongoing series on Kylie’s blossoming beauty empire. Read Part I, Part II, Part III, Part IV and Part V.

Part V of the Kylie Kronicles covered the launch of Kylie Skin and the evolving stature of Kylie Cosmetics. Since May, a lot has transpired. In early June, Kylie Skin had its first restock, initially for its kits (June 5) and then for its individual products (June 10). The kits sold out in about five minutes, further proof that there are no real plans to sell products in bulk and that Kylie is using the kits to drive demand. While this trick works one, or maybe two times, customers are realizing that they have no real chance at landing a kit, leading to diminishing returns for the brand. Three of the seven products had sold out by the time that individual products were restocked two days later on June 10.

On June 20th, Kylie emailed her Cosmetics audience that she would restock a number of sold out collections, including Kylie’s August 2018 Birthday, Holiday 2018 and Valentine’s Day. But rather than an actual restock, this was an inventory drain—a tactic companies employ to clear out their unsold inventory by taking it off their website and then bringing it back at a later date. This furthered proved that the company is buying more inventory than it can sell, highlighting that even with Ulta distributing Kylie’s products nationally, Cosmetics sales are not meeting the company’s expectations.

At the end of June, news broke that Kylie was in talks with Coty to sell a majority stake for $600 million, valuing the company at over $1 billion—albeit a far cry from the $3 billion Kylie was hoping the brand was worth back in May 2019. This comes on the heels of reports that Coty is writing down over $3 billion in costs. The beauty conglomerate said that more than 60% of its brands are “margin dilutive” and that it plans to simplify its brand portfolio. Some of these problems stemmed from Coty’s 2016 deal with P&G to buy CoverGirl, Max Factor and 40 other brands that it hoped would help it compete with larger CPG conglomerates. But Coty’s consumer beauty unit, which is responsible for almost half of its nearly $9 billion annual revenue, continues to underperform. 

Is Kylie Cosmetics the answer to Coty’s declining relevance? There is reason to be skeptical, especially given that sales of Kylie Cosmetics are slowing down and its move into Ulta, which was a response to its own slowing digital growth, has not made much of a difference. The chance that Coty overpays yet again for a brand that is either flatlining or shrinking is high, and since Kylie does not own any of the infrastructure, the assets Coty would be paying for are minimal. For Kylie, Coty does not offer much besides replacing Seed Beauty’s infrastructure, but Seed likely can move much faster than Coty can. While talks are reportedly still ongoing, there is a risk for both parties and likely overconfidence that an acquisition would solve their respective problems. 

Back in Kylie Skin land, Kylie announced Kylie Skin’s summer collection (“Drop 2”) on July 13, which debuted on July 22. The collection included Coconut Body Lotion, Coconut Body Scrub, and Broad Spectrum SPF 30 Body Oil. She also restocked all of the products from “Drop 1.” As of the end of July, five of 11 products are sold out (none of which are part of the summer collection), as well as one of the two summer bundles. The original Kylie Skin kit remains unavailable. 

While drops and sell outs might make sense for cosmetics, they are unhelpful for skincare, which is built on replenishment and customer loyalty. As people use up their initial purchases, they will likely have a hard time both replenishing their existing products and expanding into new ones. This will incentivize them to look for their skincare routine elsewhere. With Kylie’s abundance of money and time, there’s no excuse for her continued focus on drops and shallow inventory buys, which defeat the purpose of building a skin care brand in the first place. While some of these complications could be a symptom of rebuilding her supply chain and no longer relying on Seed Beauty (see Part V), the demand is predictable and thus these on-and-off results could be avoided.

There is always something going on in Kylie Land, but as her business empire continues to take shape there are a number of strategic adjustments she will need to make to build something that lasts. As discussed last week, Kanye, her brother-in-law, has done a better job at this with Yeezy/Adidas, but even he is facing the pressures of balancing scaling versus sustaining. These challenges, while not always a bad problem to have, seem to run in the family. Maybe it’s time that they take a breath and focus on the longevity of what they already have.