In a recent joint SKKN and Kim Kardashian Instagram post, the beauty brand SKKN hinted at an upcoming launch of color cosmetics, with a speculated date of Jan 26th, 2024.
Jefferies analysts interpret this as a signal that the Kardashian brands will persist under Coty's (NYSE:COTY) umbrella, providing diversification to the company’s portfolio.
“The addition of a prestige color cos line would be a positive for Coty's assortment, given we are in a makeup cycle and consumers remain willing to spend up on makeup,” the analysts said in a note.
Following Coty's minority stake acquisition in KKW, the brand underwent a transformation, shifting from makeup and fragrance to skincare with the SKKN line after KKW's suspension.
Analysts also argue that Coty could pursue smaller M&A deals.
“While mgmt. is focused on extending its current portfolio into prestige skin, we see the potential for some small tuck-in acquisitions of superior (not hyper) growth brands.”
“We est. each $200M of excess capital would afford an acq in the $15M EBITDA range using a 15x avg. multiple. If the brand bears 20% EBITDA margins, this could translate into ~$75M revenue contribution.”