Coty Inc. COTY -1.45% is paying $600 million for a controlling stake in Kylie Jenner’s cosmetics startup, wagering that the celebrity’s brand can revive a struggling beauty business based on CoverGirl and MaxFactor.
The fragrance and cosmetics company said it plans to buy 51% of Kylie Cosmetics, valuing it at $1.2 billion. Ms. Jenner, the youngest of the five Kardashian-Jenner sisters, founded the brand in 2015. She will remain the public face of the brand, which will be renamed Kylie Beauty.
Known for nude lip liners and lipsticks, Kylie Cosmetics this spring added a skin-care line. Ulta Beauty Inc. last year started carrying the makeup at its more than 1,100 stores. Kylie Cosmetics is on track for roughly $200 million in sales this year, Coty said.
It is part of a wave of fledgling cosmetics lines capitalizing on celebrity founders and social media-driven marketing. As sales of mass-market mainstays such as CoverGirl has floundered in recent years, upstarts such as Kylie and Glossier, a skin-care and makeup line developed by the founder of a popular beauty blog, are growing fast.
“This is where the growth of the market is,” Coty finance chief Pierre-André Terisse said in an interview. The brand is attractive both for its skin-care business and online presence, he said.
Coty, which is controlled by European investment firm JAB Ltd., has struggled with weak sales and executive turnover. The company is restructuring its operations and looking to sell its hair-care and professional beauty businesses, a collection of brands that account for nearly a third of its annual revenue. Last year, Coty’s annual sales were $8.6 billion.
The maker of CoverGirl, Clairol hair dye and OPI nail polish has floundered since acquiring dozens of beauty brands from Procter & Gamble Co. in 2016. Coty stock has lost half its value since the deal, and the company this year took $4 billion in write-downs on the P&G business as it struggled to digest the brands.
Write to Sharon Terlep at sharon.terlep@wsj.com
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