World News
Kylie Jenner no longer a billionaire according to Forbes: She lied
More than a decade into their fame, 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 family 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 years fighting Forbes for higher spots on our annual wealth and celebrity earnings lists.
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 greatest celebrity cash-outs of all time, the transaction seemed to confirm what Kylie had been saying all along and what Forbeshad declared in March 2019: that Kylie Jenner was, indeed, a billionaire—at least before the coronavirus
“Kylie is a modern-day icon, with an incredible sense of the beauty consumer,” Coty chairman Peter Harf gushed when announcing the acquisition in November.
But in the deal’s fine print, a less flattering truth emerged. Filings released by publicly traded Coty over the past six months 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 industry and media outlets, including Forbes, to believe.
Of course, white lies, omissions and outright fabrications are to be expected from the family that perfected—then monetized—the concept of “famous for being famous.” But, similar to Donald Trump’s decades-long obsession with his net worth, the unusual lengths to which the Jenners have been willing to go—including inviting Forbes into their mansions and CPA’s offices, and even creating tax returns that were likely forged—reveals just how desperate some of the ultra-rich are to look even richer.
“It’s fair to say that everything the Kardashian-Jenner family 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.”
Based on this new information—plus the impact of Covid-19 on beauty stocks and consumer spending—Forbes now thinks that Kylie Jenner, even after pocketing an estimated $340 million after taxes from the sale, is not a billionaire.
As with other Kardashian ventures, Kylie’s business began as a way to cash in on a minor scandal. The youngest of the family, she spent more than a year denying 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.
With $250,000 of her earnings from modeling, endorsements and Keeping Up With The Kardashians appearances, Kylie launched her first batch of 15,000 lip kits, consisting of a lip liner and matching lipstick, in November 2015. Thanks to clever Instagram marketing, the $29 kits were gone in less than a minute. “Before I even refreshed the page, everything was sold out,” she later told Forbes.
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 with documentation.”
That sky-high revenue number—repeated everywhere from People to CNBC and Fortune—took hold. By the summer of 2018, when Forbes set out to calculate Kylie’s net worth for our list of the richest self-made women, the industry’s opinion of Kylie’s business had shifted. Those huge revenues were “totally possible,” said one analyst, adding that she had heard similar numbers herself. Another suggested revenues were around $350 million. The estimates kept climbing. Revenues were $400 million, according to a Piper Jaffray research note in 2018. An Oppenheimer report projected sales would top $700 million by 2020.
The Jenners offered us their own number: 2017 revenues were up 7%, they said, to $330 million. “No other influencer has ever gotten to the volume or had the rabid fans and consistency that Kylie has had for the last two and a half years,” an executive at e-commerce platform Shopify, which manages Kylie’s online store, told Forbes at the time. Based on her rapid success—certified by industry sources, plus those 2016 tax returns—Kylie appeared on the cover of Forbes magazine in July 2018, ranking No. 27 on our listing of the richest self-made women. At age 20, she was worth $900 million, we estimated, and would soon become the youngest self-made billionaire ever.
“Thank you for this article and the recognition,” Kylie Instagrammed. Kim Kardashian West tweeted her congratulations—twice. “I am SO proud,” Kris Jenner wrote, finally pleased.
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-shirts with Kylie’s Forbes cover printed on them, her face plastered next to the words “America’s Women Billionaires.” By early the next year, she officially crossed the ten-digit threshold.
Any doubts that Kylie wasn’t a billionaire were seemingly erased in November 2019, when $8.6 billion (revenues) Coty announced it was snapping up 51% of Kylie Cosmetics for $600 million, effectively valuing the business at about $1.2 billion. The deal gave the struggling 116-year-old Coty a hip, social media-savvy brand to help turn around its sagging balance sheet. It gave Kylie a major chance at expansion, plus a boatload of cash and apparently clear proof of her billionaire status.
In a call with stock analysts, Coty’s chief financial officer heralded the deal as “a compelling financial equation” that would help “make Coty a modern, growing and profitable beauty player.” The analysts were immediately skeptical. It looked like Coty was paying way too much for a celebrity brand that could prove to be just a fad, one charged. Another asked how Coty could be sure Kylie will remain committed to promoting the business in the years to come.
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.”
Taking all this new information into account and factoring in the pandemic, Forbes has recalculated Kylie’s net worth and concluded that she is not a billionaire. A more realistic accounting of her personal fortune puts it at just under $900 million, despite the headlines surrounding the Coty deal that seemed to confirm her billionaire status. More than a third of that is the estimated $340 million in post-tax cash she would have pocketed from selling a majority of her company. The rest is made up of revised earnings based on her business’ smaller size and a more conservative estimate of its profitability, plus the value of her remaining share of Kylie Cosmetics—which is not only smaller than the Jenners led us to believe but is also worth less now than it was when the deal was announced in November, given the economic effects of the coronavirus.
Coty’s share price has fallen more than 60% since the deal was struck, and even better-performing competitors like Ulta Beauty and Estée Lauder are still down single digits. Add that to the fact that Wall Street tends to think Coty paid too much to begin with and there is no way to realistically peg Kylie’s net worth above a billion—despite her massive cash-out.
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.
Additional reporting by Chloe Sorvino.
Source: Forbes
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2024 MTV Video Music Awards (VMAs) to air LIVE on DStv
MTV has announced the 2024 “VMAs” will make its return to New York on Tuesday, September 10th at the UBS Arena. Airing LIVE on MTV, DStv Channel 130 on Wednesday, 11 September at 1:00am WAT and 2:00am CAT around the world in more than 150 countries. This year’s global fan-filled phenomenon will celebrate the best music videos of the past year with supersized performances, epic tributes, and unforgettable appearances from the world’s biggest celebrities.
“We’re excited to bring this year’s VMAs to UBS Arena, one of the country’s newest and most cutting edge venues,” said Bruce Gillmer, President of Music, Music Talent, Programming & Events, Paramount and Chief Content Officer, Music, Paramount+. “Celebrating one of music’s biggest nights with the incredible, robust New York area fans is something we’ve been looking forward to since the moment last year’s show ended.”
“It’s an honor to host MTV and the VMAs at UBS Arena,” said Mark Shulman, Senior Vice President of Programming, UBS Arena. “This is the culmination of bringing a world class event to a venue that offers state of the art capabilities and the best in fan amenities. We look forward to welcoming this year’s top artists, fans, and viewers worldwide to experience our arena and campus at Belmont Park.”
“We are excited to welcome back the MTV Video Music Awards to New York State,” said New York Governor Kathy Hochul. “From its origins at Radio City Music Hall in 1984 to this September’s event at the UBS Arena, the VMAs continue to captivate millions, showcasing the very best in music video artistry. As we prepare to host this 40th anniversary event, let’s embrace the spirit of creativity and innovation that defines our state’s cultural landscape.”
The “VMAs” will air across MTV’s global footprint of linear and digital platforms in more than 150 countries and territories, reaching over 319 million households.
Additional details will be announced closer to the show. Follow @MTV and @VMAs on social to keep up with all-things #VMAs.
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Major step in malaria prevention as three West African countries roll out vaccine
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Today’s launch brings to eight the number of countries on the continent to offer the malaria vaccine as part of the childhood immunization programmes, extending access to more comprehensive malaria prevention. Several of the more than 30 countries in the African region that have expressed interest in the vaccine are scheduled to roll it out in the next year through support from Gavi, the Vaccine Alliance, as efforts continue to widen its deployment in the region in coordination with other prevention measures such as long-lasting insecticidal nets and seasonal malaria chemoprevention.
Benin, which received 215 900 doses, has added the malaria vaccine to its Expanded Programme on Immunization. The malaria vaccine should be provided in a schedule of 4 doses in children from around 5 months of age.
“The introduction of the malaria vaccine in the Expanded Programme on Immunization for our children is a major step forward in the fight against this scourge. I would like to reassure that the malaria vaccines are safe and effective and contribute to the protection of our children against this serious and fatal diseases,” said Prof Benjamin Hounkpatin, Minister of Health of Benin.
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“For far too long, malaria has stolen the laughter and dreams of our children. But today, with this vaccine and the unwavering commitment of our communities, healthcare workers and our partners, including Gavi, UNICEF and WHO, we break the chain. We have a powerful tool that will protect them from this devastating illness and related deaths, ensuring their right to health and a brighter future. Let’s end malaria in Liberia and pave the way for a healthier, more just society,” said Dr Louise Kpoto, Liberia’s Minister of Health.
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In Sierra Leone, the first doses were administered to children at a health centre in Western Area Rural where the authorities kicked off the rollout of 550 000 vaccine doses. The vaccine will then be delivered in health facilities nationwide.
“With the new, safe and efficacious malaria vaccine, we now have an additional tool to fight this disease. In combination with insecticide-treated nets, effective diagnosis and treatment, and indoor spraying, no child should die from malaria infection,” said Dr Austin Demby, Minister of Health of Sierra Leone.
Malaria remains a huge health challenge in the African region, which is home to 11 countries that carry approximately 70% of the global burden of malaria. The region accounted for 94% of global malaria cases and 95% of all malaria deaths in 2022, according to the World Malaria Report.
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Aurelia Nguyen, Chief Programme Officer at Gavi, the Vaccine Alliance, noted: “Today we celebrate more children gaining access to a new lifesaving tool to fight one of Africa’s deadliest diseases. This introduction of malaria vaccines into routine programmes in Benin, Liberia, and Sierra Leone alongside other proven interventions will help save lives and offer relief to families, communities and hard-pressed health systems.”
Progress against malaria has stalled in these high-burden African countries since 2017 due to factors including climate change, humanitarian crises, low access to and insufficient quality of health services, gender-related barriers, biological threats such as insecticide and drug resistance and global economic crises. Fragile health systems and critical gaps in data and surveillance have compounded the challenge.
To put malaria progress back on track, WHO recommends robust commitment to malaria responses at all levels, particularly in high-burden countries; greater domestic and international funding; science and data-driven malaria responses; urgent action on the health impacts of climate change; harnessing research and innovation; as well as strong partnerships for coordinated responses. WHO is also calling attention to addressing delays in malaria programme implementation.
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