Kris Jenner may have inflated Kylie Cosmetic's earnings

Kris Jenner may have inflated Kylie Cosmetic's earnings

Kris Jenner, the Kardashian-Jenner kindred matriarch, helps guide her daughters through business decisions—for a price. She takes 10% of their earnings, including an estimated $60 million haul, pretax, from the Coty sale.

Turns Out Kylie Jenner Might Not Be a Billionaire After All

Aya is a writer based in Kalamazoo, Michigan. She's been a journalist for four years and is an aspiring screenwriter. In her free time, she resembling to watch and study television & film.

Kardashian Family Net Worth 2019 - The Kardashians Are Worth ...

More than a decade into their notoriety, the Kardashian-Jenners tend to induce eye rolls and sighs among jaded media consumers. But when it comes to their wealth, even critics of reality TV's first house are intrigued; the Kardashian-Jenner machine—and the cash it generates—has been the subject of articles, podcasts, even books. But no one cares more about the topic than the family itself, which has spent ages fighting Forbes for higher spots on our yearly wealth and celebrity earnings lists.

Kylie Jenner and mom Kris secretly 'worried' about Forbes' claims ...

"I think everybody was surprised," says Wissink, the Jefferies analyst, who was on the call. "The negative that came out of that announcement was that the business was a lot smaller than everybody had expected."

At the time, Wall Street suspected Coty may have overpaid for the majority stock. The worries were fueled by new financial disclosures made by the openly listed company, which revealed earnings for Kylie Cosmetics were far decrease than Kylie beforehand assert.

In a call with stock analysts, Coty's chief financial dogberry heralded the deal as "a compelling financial equation" that would help "force Coty a modern, growing and profitable beauty player." The analysts were immediately skeptical. It looked like Coty was defrayment way too much for a solemnization kind that could prove to be just a fad, one charged. Another implore how Coty could be confident Kylie will remain committed to promoting the business in the years to come.

But in the manage's fine print, a less flattering truth emerged. Filings released by publicly traded Coty over the elapsed six months lay bare one of the lineage's choice-kept secrets: Kylie's business is significantly smaller, and less profitable, than the family has spent donkey's years leading the cosmetics industry and media outlets, including Forbes, to believe.

To understand where all of Kylie's money went, you have to understand what exactly went down with the Kylie Cosmetics sale to Coty Inc. The beauty society acquired a 51% stake of Kylie Cosmetics worth $600 million in January 2020 after roughly eight months of negotiations. Coty was anxiously awaiting the acquisition so they could beginning a tour towards supplies toward a younger company. The need to appeal to a younger demographic is what drove Coty to chase a stake in KKW Beauty, Kim's cosmetics company. Coty bribed a 20% stake of KKW Beauty in July that launched the reality star consolidate to the billionaire mark.

"It is grievous that, of all things, Forbes has devoted three reporters to investigate the effect of the coronavirus crisis on Kylie's net worth. We would not expect that from a supermarket tabloid, much less from Forbes."

UPDATED (May 20, 2020): Counsel for Kylie Jenner has response to Forbes' article. Michael Kump, said in a statement to The Post, "We have reviewed Forbes' moment accusing Kylie of engaging in deceit and a 'envelop of lies' to inflate her net merit. The moment is filled with outright lies. Forbes' impeachment that Kylie and her accountants 'counterfeit tax returns' is unequivocally false and we are demanding that Forbes immediately and openly retract that and other statements."

For years, the Jenners insisted that all of those profits went expressly to Kylie because she owned the business outright. But Coty's acquisition agreement specifically lists a "KMJ 2018 Irrevocable Trust," controlled by Kristen M. Jenner, as owning a profit interest in Kylie Cosmetics. Upon the sale, the document says the trust would get a capital, or ownership, interest in the company. The Jenners initially told Forbes that the trust continue money Kylie Jenner earned before she turned 18 and that Kylie is its beneficiary. But the trust appears to have been created well after Kylie turned 18, and the Jenners declined to attempt any proof to back up their claims. Given the lack of clarity—and the history of lies—we're erring on the side of caution and assuming that the trust belongs to Kris Jenner. That means Kylie Jenner owns an estimated 44.1% of Kylie Cosmetics, rather than 49%.

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I cover the intersection of Hollywood and money—that's everything from media moguls to the highest-paid actors to YouTube *. When my reporting isn't taking me to Hollywood restaurants and Atlanta's movie plot, I'm writing about the globe's richest, terminate billionaires and same-made ladies entrepreneurs. Prior to Forbes, I wrote throughout media, food and teaching for the New York Observer, and about the New York warehouse scene for Racked. Follow me on Twitter @MadelinePBerg. Have tips? Send them to me anonymously at forbes.com/tips, and submit sensitive handwriting anonymously and securely at SafeSource.forbes.com.

As usual, we asked the Jenners for input on our numbers. But pressed for answers on the many discrepancies, the typically chatty family did something out of character: They stopped answering our questions.

'In the entertainment and perhaps even the advertising field, exaggeration, puffery if you will, is a age-honored tradition. But here, a private association was solary for a lot of coin to a liberal publicly traded company. That brings a lot more scrutiny.

As with other Kardashian ventures, Kylie's business open as a way to cash in on a minor scandal. The youngest of the family, she spent more than a year withhold tabloid speculation that she was using lip filler injections before eventually finally fessing up to it in May 2015. Far from being embarrassed about being caught in a lie, she—and her shrewd mother, Kris—seized it as a marketing opportunity.

'Part of the design of investigations and enforcement actions is to deter others. So when a case comes out with a lot of high-profile individuals and a natural attraction to many members of the public, this would be a good way to do it – whether or not it's warranted in this case,' he said.

"It's candid to say that everything the Kardashian-Jenner lineage does is oversized," says Stephanie Wissink, an equity analyst covering consumer products at Jefferies. "To stay on-brand, it needs to be bigger than it is."

Madeline BergI cover the intersection of Hollywood and money—that's everything from media moguls to the highest-paid actors to YouTube stars. When my reporting isn't infectious me to… Read MoreI cover the intersection of Hollywood and money—that's everything from media moguls to the highest-hirer actors to YouTube stars. When my reporting isn't taking me to Hollywood restaurants and Atlanta's movie lots, I'm writing about the earth's richest, including billionaires and particular-made women entrepreneurs. Prior to Forbes, I wrote about media, food and education for the New York Observer, and about the New York shopping scene for Racked. Follow me on Twitter @MadelinePBerg. Have tips? Send them to me anonymously at forbes.com/tips, and submit sensitive documents anonymously and securely at SafeSource.forbes.com. Read Less

Jenner, the youngest sibling of the Kardashian family, invent her makeup line with lipstick kits in 2015. Kylie Cosmetics signed a deal with Ulta Beauty Inc to put her products in all of the retailer's 1,163 U.S. stores (above)

I cover the intersection of Hollywood and money—that's everything from media moguls to the highest-hirer actors to YouTube stars. When my reporting isn't taking me to Hollywood restaurants and Atlanta's movie lots, I'm writing about the world's richest, including billionaires and self-made women entrepreneurs. Prior to Forbes, I wrote circularly media, food and education for the New York Observer, and about the New York shopping scene for Racked. Follow me on Twitter @MadelinePBerg. Have tilt? Send them to me anonymously at forbes.com/tips, and submit sensitive documents anonymously and safely at SafeSource.forbes.com. Read Less

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At the age of the deal with Kylie Cosmetics, the company was valued at $1.2 billion. This was quite an accomplishment considering Kylie Cosmetics was founded only six years past. For years, the Jenner publicity team had been campaigning for Kylie to appear on the incubate of Forbes. They began the campaign after Kim appearance on the cover for the succession of her mobile game, Kim Kardashian Hollywood.

So when the youngest of the clan, Kylie Jenner, sold 51% of her Kylie Cosmetics to beauty giant Coty in a deal valued at $1.2 billion this January, it was a watershed moment for the family. One of the top celebrity cash-outs of all time, the transaction seemed to confirm what Kylie had been byword all along and what Forbes had declared in March 2019: that Kylie Jenner was, indeed, a billionaire—at least before the coronavirus.

After speaking with a handful of analysts and industry experts who also found the Jenners' claims implausible, we bench on a more reasonable estimate for our 2017 Celebrity 100 list: $41 million in overall earnings for Kylie, good for the No. 59 spot. Kris was "so frustrated," the Jenners' PR flack shot back. "We've done so much."

How big is Kylie Jenner's "$1 billion" beauty brand? That is the inquiry being posed by Forbes in connection with the 22-year old's Kylie Cosmetics contingency and her since-revoked status as a billionaire on Forbes' annual list. According to Forbes, filings tied to the sale of a majority stake in Kylie Cosmetics to jewel conglomerate Coty, Inc. "lay bare one of the family's best-kept secrets: Kylie's business is significantly smaller, and less profitable, than the family has spent years leading the cosmetics activity and media outlets, including Forbes, to believe."

'The assertions may sound admirable if you're on Instagram or Facebook. But when you move that over into bestowal with a publicly practiced company, then you cross over into a situation where you might be accused of not regular exaggerating, but financial statement guile.' 

I cover the intersection of Hollywood and money—that's everything from media moguls to the highest-paid actors to YouTube stars. When my reporting isn't taking me to… Read MoreI cover the intersection of Hollywood and money—that's everything from media moguls to the highest-compensated actors to YouTube stars. When my reporting isn't taking me to Hollywood restaurants and Atlanta's movie fate, I'm book about the world's richest, including billionaires and self-made ladies entrepreneurs. Prior to Forbes, I wrote near media, food and breeding for the New York Observer, and about the New York shopping scene for Racked. Follow me on Twitter @MadelinePBerg. Have tips? Send them to me anonymously at forbes.com/tips, and submit sensitive documents anonymously and securely at SafeSource.forbes.com. Read Less

The next month Kylie celebrated her 21st birthday at West Hollywood nightclub Delilah, in a Barbie-themed blowout complete with a pink ball pit, performances by Travis Scott and Dave Chappelle—and bartenders in black T-chemise with Kylie's Forbes cover printed on them, her shamelessness plastered next to the words "America's Women Billionaires." By early the next year, she officially misfortune the ten-digit sill.

Chase Peterson-WithornI cover the most successful entrepreneurs doing the biggest deals on the satellite. As deputy prosperity conductor, I succor put together the Forbes 400 and World's Billionaires… Read MoreI cover the most successful entrepreneurs doing the biggest deals on the planet. As deputy wealth editor, I support put together the Forbes 400 and World's Billionaires lists and oversee Forbes' insurance of billionaires. My reporting has taken me everywhere from the world's largest cardboard spar factory to Donald Trump's penthouse. Email me at cpeterson-withorn@forbes.com. Read Less

Still, virtually every industry expert polled by Forbes contemplate the business couldn't have collapsed by so much so quickly. "It seems unpromising that much revenue could have evaporated overnight," says Evercore analyst Omar Saad. "There doesn't seem to be any evidence the business has cratered," adds cosmetics veteran Jeffrey Ten, who has led circle like Note Cosmetics, Nyx and Calvin Klein Beauty. "If so, why would Coty buy it?"


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