https://www.forbes.com/sites/chasewithorn/2020/05/29/inside-kylie-jennerss-web-of-lies-and-why-shes-no-longer-a-billionaire/#3922e3aa25f7 Excerpts from article below.
now thinks that Kylie Jenner, even after pocketing an estimated $340 million after taxes from the sale, is not a billionaire.
By the end of 2016, Kylie had dozens of new products and a reputation as a skyrocketing new entrant in the cosmetics industry. A few months after her sister Kim Kardashian West scored a Forbes cover
in July 2016, Jenner publicists began a campaign to “get a Forbes
cover for Kylie.” Revenues were $400 million over the business’ first 18 months, they said, with a personal take-home pay of $250 million for Kylie. Pressed for proof, they opened up their books. During meetings at Kris Jenner’s palatial Hidden Hills, California, estate and the family accountant’s office nearby, Forbes
was shown tax returns detailing $307 million in 2016 revenues and personal income of more than $110 million for Kylie that year. It would have been enough to put her at N0. 2 on the Celebrity 100 list, behind only Taylor Swift, the accountant was quick to point out. But the documents, despite looking authentic and bearing Kylie Jenner’s signature, weren’t exactly convincing since the story they told, of e-commerce brand Kylie Cosmetics growing from nothing to $300 million in sales in a single year, was hard to believe.
After speaking with a handful of analysts and industry experts who also found the Jenners’ claims implausible, we settled 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.”
Two months later, a story appeared in WWD
, a trade publication known as “the bible of fashion,” using the exact numbers the Jenners first tried to give Forbes
. “There has been raging speculation about the size of her business, with guesstimates ranging from $50 million up to $300 million,” the story reads. “Well, here’s the bad news for more-established beauty players: Jenner’s surpassed the higher figure with ease. Kylie Cosmetics actually has done $420 million in retail sales—in just 18 months—Kris Jenner revealed. . . . ” It was the first time the Jenners had publicly disclosed the size of the business, the story boasted—“and they provided WWD
Then there were Kylie’s financials. Revenues over a 12-month period preceding the deal: $177 million, according to the Coty presentation—far lower than the published estimates at the time. More problematic, Coty said that sales were up 40% from 2018, meaning the business only generated about $125 million that year, nowhere near the $360 million the Jenners had led Forbes
to believe. Kylie’s skin care line, which launched in May 2019, did $100 million in revenues in its first month and a half, Kylie’s reps told us. The filings show the line was actually “on track” to finish the year with just $25 million in sales.
“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.”
So much smaller, in fact, that there’s virtually no way the numbers the Jenners were peddling in earlier years could be true either. If Kylie Cosmetics did $125 million in sales in 2018, how could it have done $307 million in 2016 (as the company’s supposed tax returns state) or $330 million in 2017?
One explanation: Kylie’s business quietly fell by more than half in a single year. If so, Coty paid up for a “high-growth” brand that is actually a much smaller
business than it was just a few years ago. (Coty would not answer any questions about Kylie Cosmetics for this story.) Data from e-commerce firm Rakuten, which tracks a select number of receipts, suggests there was a 62% decline in Kylie’s online sales between 2016 and 2018.
Still, virtually every industry expert polled by Forbes
thinks the business couldn’t have collapsed by so much so quickly.
“It seems unlikely 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 companies like Note Cosmetics, Nyx and Calvin Klein Beauty. “If so, why would Coty buy it?”
More likely: The business was never that big to begin with, and the Jenners have lied about it every year since 2016—including having their accountant draft tax returns with false numbers—to help juice Forbes’
estimates of Kylie’s earnings and net worth. While we can’t prove that those documents were fake (though it’s likely), it’s clear that Kylie’s camp has been lying.
There’s also the issue of profit: Forbes
had been estimating that her business, which has little overhead, was notching 44% net margins. But Coty’s filings indicate that Kylie’s profits are likely lower than we figured, since her Ebitda margin—which factors in some, but not all, of her expenses—is only around 25%.
For years, the Jenners insisted that all of those profits went directly to Kylie because she owned the business outright. But Coty’s purchase 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 holds 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 offer 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%.
“You have to remember they are in the entertainment business,” says Ten. “Everything in entertainment has to be exaggerated to get attention.”