Kylie Cosmetics Parent Company Sued for Exaggerating the Brand’s Value

Update: In a proposed class action lawsuit filed in a New York federal court on September 4, a Coty shareholder named Crystal Garrett-Evans claims that the company and a handful of its highly-ranking officers and directors engaged in “a fraudulent scheme and course of business that operated [to deceive] purchasers of Coty shares by disseminating materially false and/or misleading statements and/or concealing material adverse facts… about Coty’s business, operations, and prospects,” per The Fashion Law. Among the things the company “misrepresented,” according to the lawsuit, is the fact that Coty didn’t have what Garrett-Evans calls “adequate processes and procedures in place to assess and properly value the P&G Specialty Beauty Business and Kylie Cosmetics acquisitions.” This despite having acquired and being familiar with beauty brands. “[And] as a result, Coty overpaid for [them].”

Because Coty didn’t properly value Kylie Cosmetics, Garrett-Evans alleges that “Coty’s financial statements and the defendants’ statements about Coty’s business … were materially false and/or misleading at all relevant times,” and says that this miscalculation has “negatively impacted the value of [Coty] shares” since the release of the May 29 Forbes article. According to The Fashion Law, at least a dozen other U.S. law firms have said they have plaintiffs who’ll be pursuing similar cases against Coty.

The Kardashian-Jenner family is known for exaggerating a lot, from the severity and validity of their family feuds to the size of their lips and now, maybe their fortunes, too? At least according to Forbes. In a May 29 article, the business magazine claims that Kylie Jenner isn’t actually a billionaire. Based on insights from experts and figures from the November 2019 sale of 51% of Kylie Cosmetics to beauty brand Coty, Forbes estimates that Kylie is *actually* still just your run of the mill multimillionaire.

Which, let’s be honest, is fine, but the magazine says that they were led to believe otherwise by the Jenner publicists, and claims that the family exaggerated Kylie’s success. And Kylie herself is not having it. Here’s everything you need to know about the mini-feud going down on our timelines right now.

Forbes is pretty into Kylie and her billionaire status—even if other people aren’t

What makes Forbes’s new report on Kylie and her beauty empire so wild is the fact that the magazine has been very vocal about Kylie’s billionaire status for some time now. In March 2019, the publication declared that the youngest Kardashian-Jenner sibling was, at 21-years-old, “the youngest self-made billionaire ever,” after expanding Kylie Cosmetics into brick and mortar stores like Ulta Beauty. In their March 2019 story on the mogul, Forbes noted that in the year prior, Kylie Cosmetics’ revenue had grown by 9%, taking the biz to an estimated $360 million in revenue. Which is no chump change. And the writer Natalie Robehmed dubbed Kylie “the first selfie-made billionaire.”

In April 2020, Forbes once again reported on Kylie’s worth and business revenue, doubling down on her certified billionaire status, using the 2019 sale of 51% of Kylie Cosmetics to beauty giant Coty Inc. for $600 million as proof, and once again describing the reality star as “self-made.” The term was first used by Forbes in a July 2018 cover story on Kylie’s then-growing empire, a point that became highly contested and debated by users on social media. Many people took particular offence to the term “self-made,” considering Kylie came from a wealthy and privileged family whose celebrity status and earnings initially gave her an advantage that many others aren’t afforded.

And TBH, the debate is *still* ongoing.

That is, until recently

But, it turns out that Kylie is no longer the first “selfie-made billionaire,” at least in the eyes of Forbes and many of the business analysts and experts they interviewed. In their latest piece, titled “Inside Kylie Jenner’s Web of Lies—and Why She’s No Longer A Billionaire,” the magazine reported that that the business owner may not *actually* be as successful as was first reported. Discussing the November 2019 sale of 51% of Kylie Cosmetics to Coty, Forbes said that despite the $1.2 billion transaction seemingly confirming that Kylie was indeed a billionaire, “in the deal’s fine print, a less flattering truth emerged.” Per Forbes,  filings released by Coty—which is a publicly traded company—over the past six months reportedly showed that “Kylie’s business is significantly smaller, and less profitable, than the family has spent years leading the cosmetics industry and media outlets, including Forbes, to believe.”

Looking specifically at the revenue made by the cosmetics company since being acquired by Coty, Fobes reports that, according to a Coty presentation, Kylie Cosmetic’s revenue in the 12 months preceding November 2019 was $177 million. It’s still a lot of money, but Forbes reports that this number was a 40% increase from 2018 in sales. Which means that in 2018, Kylie Cosmetics reportedly made about $125 million. The problem? According to the magazine, in 2018, the Jenner fam “led Forbes to believe” that the company had made $360 million in 2018.

It’s a discrepancy in revenue numbers that Forbes alleges puts her billionaire status in questions. “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?,” the magazine posed. They said it’s not possible, noting that a decline in revenue that steep would have caused the company to collapse. And several experts they interviewed agree.

In the latest article, Forbes posits that the only explanation is that the Kardashian-Jenners inflated Kylie’s personal and professional monetary success, “inviting Forbes into their mansions and CPA’s offices, and even creating tax returns that were likely forged.” It reveals, they concluded, “just how desperate some of the ultra-rich are to look even richer.” Ouch.

It’s important to note that it doesn’t appear that Forbes has seen any more recent documents from the family or Coty, and are *assuming* that Jenner’s earlier tax returns were forged. Coty refused to comment on the article.

And Kylie’s not having it

In typical Kardashian-Jenner fashion, Kylie wasn’t one to sit idly by and say nothing (at least when it comes to defending her name and business savvy). On May 29, the beauty mogul responded to Forbes’s claims in a handful of tweets disparaging the magazine and their reported “proof” of her true earnings.

“What am i even waking up to. i thought this was a reputable site,” Jenner tweeted. “all i see are a number of inaccurate statements and unproven assumptions lol. i’ve never asked for any title or tried to lie my way there EVER. period.”

In a follow-up tweet, Kylie addressed some comments made in the piece, including Forbes’s allegation that some of the tax returns the magazine was initially shown when interviewing the young mogul in 2018 must have been forged. “‘even creating tax returns that were likely forged'” that’s your proof? so you just THOUGHT they were forged? like actually what am i reading,” Kylie concluded.

As many people pointed out online, there are *a lot* more important things going on in the world right now than than arguing over how much money this already very famous and very wealthy person has (something Kylie herself acknowledged).

So, let’s just all agree that she’s über rich and move on?