Coty's Beauty Bet: A Strategic Shift or a Missed Opportunity?

In the ever-evolving landscape of the beauty industry, Coty Inc. has made a bold move by selling its 20% stake in Kim Kardashian's SKKN by Kim brand to SKIMS. This transaction, announced on March 22, 2025, marks a significant shift in the strategic positioning of both companies. But is this a strategic masterstroke or a missed opportunity?

Coty, a 120-year-old beauty giant, has long been known for its innovative approach to consumer products. With a diverse portfolio of prestige and mass beauty brands across fragrance, color cosmetics, skin, and body care, Coty has consistently remained at the forefront of consumer innovation. The company's best-in-class R&D, global manufacturing, and distribution footprint have allowed it to capture consumer demand across various price points, channels, categories, and markets. By selling its stake in SKKN by Kim, Coty can now focus on growing its hugely successful Kylie Cosmetics brand, which it has grown by 1.5x in the last two years and where it owns the majority, as well as holds the perpetual license.

For SKIMS, the acquisition of Coty's stake in SKKN by Kim allows the company to unite its beauty and lifestyle ventures under one brand. This move could enhance SKIMS' market presence and consumer reach, leveraging the combined strengths of both brands. As Kim Kardashian's shapewear brand, Skims, is now worth $4 billion, this strategic move positions SKIMS as a major player in the beauty and lifestyle industry. The transaction also aligns with SKIMS' plans to expand its product offerings and customer base, which is composed of 70% Gen Z and millennial customers. This strategic positioning allows SKIMS to capitalize on the growing demand for beauty and lifestyle products among younger consumers, further solidifying its market leadership.



However, the financial implications of this transaction for both companies are not as straightforward. For Coty, the sale of its stake in SKKN by Kim represents a strategic move to focus on its core strengths and more profitable ventures. But at what cost? By divesting from SKKN by Kim, Coty is giving up a potential high-growth opportunity in the luxury skincare market. SKKN by Kim's nine-step skincare regimen, which retails for $673, is a testament to the brand's potential for growth and profitability.

On the other hand, SKIMS' acquisition of the 20% stake in SKKN by Kim could enhance its market valuation by expanding its product offerings and customer base. But will this move be enough to justify the $4 billion valuation of Skims? Only time will tell.

In conclusion, the transaction between Coty Inc. and SKIMS is a strategic move that could have significant financial implications for both companies. While Coty's divestment from SKKN by Kim allows it to focus on its core strengths and more profitable ventures, it also gives up a potential high-growth opportunity in the luxury skincare market. Meanwhile, SKIMS' acquisition of the 20% stake in SKKN by Kim could enhance its market valuation by expanding its product offerings and customer base, leading to increased revenue and profitability. But will this move be enough to justify the $4 billion valuation of Skims? Only time will tell.