Coty made a $71.1 million loss on the divestiture of Skkn, Kim Kardashian’s beauty business, the company said in its third-quarter earnings.
Coty, the beauty company behind the likes of Cover Girl, Kylie Cosmetics and Lancaster, took a 20 percent stake in Kardashian’s beauty interests in 2022 for $200 million and together they launched Skkn by Kim, a $630, nine-step skin care system. In January 2024, the brand dove back into color cosmetics, with a collection of lip liners, lipsticks and an eye shadow palette. Neither initiative seemed to have the success of the earlier offerings, and in between, both parties were relatively quiet about the brand — until the sale in March.
As reported, in March, Kardashian regained full control of Skkn by Kim, with her shapewear and apparel company Skims acquiring Coty’s 20 percent stake, while Kardashian’s 80 percent stake was also transferred to Skims, the company she founded with Jens and Emma Grede. At the time, terms of the deal were not disclosed.
For the third quarter of fiscal year 2025 ended March 31, Coty’s net revenues fell 6 percent to $1.29 billion. Analysts had forecast $1.3 billion.
Prestige net revenue fell 4 percent during the quarter compared with a year earlier, while consumer beauty net revenue declined 9 percent.
The prestige fragrance category, which had for some time boosted sales, continued to grow, but moderated to a midsingle-digit percentage pace in the third quarter on a comparable basis.
Geographically, Americas net revenue was down 10 percent, EMEA dropped 3 percent and Asia-Pacific was 5 percent lower.
Coty recorded a third-quarter net loss of $409 million, compared with net income of $500,000 in the prior year.
Sue Nabi, Coty’s chief executive officer, said: “While we are not satisfied with our net revenue performance, Coty’s strong fundamentals, coupled with our multipronged attack-plan for accelerating innovation, distribution and efficiencies, gives us confidence for the years ahead.”
Last month, it revealed plans to cut up to 700 jobs as it revisits a strategy launched during the pandemic.
“We are committed to building a stronger, more resilient Coty that is well-positioned for sustainable growth. When we first announced our All-in to Win program in FY20, at the peak of COVID-19 disruptions, our goal was to boost our margin profile and brand reinvestment firepower through a significantly lower fixed cost structure, supply chain simplification, procurement savings and strategic revenue management initiatives,” Nabi said at the time. “With the cyclical and structural changes in the beauty industry and the global economy in recent years, including the rapid acceleration of e-commerce, the consolidation of retail channels and customers, and the new ways of consumer brand discovery, Coty must once again adapt and evolve.”
This will include streamlining the organizational structure across key markets to unlock operational efficiencies, making support functions more efficient, boosting innovation impact and reducing non-people fixed costs across all areas of spend.
The program is expected to generate annual fixed cost savings of about $130 million before taxes, while the one-time cash costs associated with the program are expected to be about $80 million.