CORE Industrial Partners, a private equity firm backing behind-the-scenes industry technology, manufacturing and services, is getting a pop of conspicuous girliness.
It’s acquired a majority stake in the maximalist makeup brand Winky Lux for an undisclosed amount in its first pickup of a front-facing beauty property. CORE entered the beauty business with a series of four factory transactions, the first of which was in 2020, that led to the creation of diversified contract manufacturing platform Cohere Beauty. Winky Lux’s management team is staying intact, and Natalie Mackey, co-founder and CEO of the brand, will continue as an equity partner.
John May, managing partner of CORE, says in a statement, “The growth prospects and underlying demand drivers of the beauty industry remain highly attractive, and we’re confident that the strength of the Winky Lux brand combined with our resources and operational expertise will assist their leadership team in executing against their long-term plans for growth. We are excited to further our participation in the beauty industry with the Winky Lux partnership.”
Cassandra Batista, GM at Byoma parent company Future Beauty Labs, is joining Winky Lux’s board. Zack Zavalydriga, ex-SVP of global sales at DevaCurl, retains a board seat. Raymond James advised CORE on the Winky Lux deal. With offices in Chicago, Austin and Cleveland, CORE has committed over $1.58 billion in limited partner capital across four funds. Based in New York, Winky Lux’s team has around 25 people. It also has a store in Nashville.
The deal with CORE will enable Winky Lux to shore up inventory, elevate its retail presence and fuel product innovation, particularly in complexion products stoking customer loyalty. The brand has substantial runway at the retailers carrying it. For example, it’s stocked in 400 Ulta Beauty doors, but the beauty specialty chain has 1,400-plus locations. Along with Ulta, Winky Lux is available at Macy’s, Shoppers Drug Mart, Anthropologie, Amazon and Target, where it arrived in 2020. Its sales are north of $20 million, and it crossed into profitability in 2020.
“Since its inception, Winky Lux has been challenged with keeping up with customer demand,” says Mackey. “The partnership with CORE allows us to fund existing growth and expand its reach in existing retail channels—Target, Ulta, Shoppers Drug Mart—and achieve in-stock rates customers deserve.”
“Winky Lux has been challenged with keeping up with customer demand.”
Winky Lux doesn’t employ Cohere Beauty for manufacturing at present, but will explore the possibility of tapping its capabilities in the future. Rapid production has been a hallmark of the brand, and it can whip out product releases within six months that it often tests in direct-to-consumer distribution. Although it relies on outsourcing, Mackey explains the brand manages various elements of the supply chain, from packaging to manufacturing, in-house to hasten speed to market.
Winky Lux was birthed in 2015 by Glow Concept, an online marketplace launched by Mackey, who was formerly in finance and fashion marketing brands such as Prabal Gurung and Christian Siriano, and Nathan Newman, who formerly established and ran a gaming accessories company, centered on an affiliate model. They developed beauty brands in pursuit of higher margins and millennial consumers flexing their spending power. Winky Lux proved to be a winning brand, but Glow Concept had others, including Laqa & Co. and Exact Skin.
Suiting Mackey’s overtly feminine aesthetic, Winky Lux’s Parisian-inspired design was a departure from the minimalist brands then making gains in beauty. Noting Winky Lux sits in masstige with an average price of $18, Mackey points out one of the leading rationales behind it was to offer elevated design at affordable prices.
In focus groups, she elaborates Winky Lux detected consumer embarrassment around mass-market makeup products due to second-rate packaging. Consumers thrilled to pull out prestige makeup products from Charlotte Tilbury, Dior or Gucci from their makeup bags were less than thrilled to pull out similar products from mass-market brands.
At Winky Lux, Mackey says, “We did very luxe, very indulgent packaging. The idea was that our packaging was supposed to look like jewelry.”
Winky Lux began with Lip Pill, a lipstick in a pill-shaped component, and Diamond Powder Foundation, a matte foundation with powdered diamonds. The next year, it introduced Flower Balm, a lip stain activated by a user’s pH that contains a real flower, and it was a viral sensation. The pH lip balms account for 30% of Winky Lux’s sales today. In DTC distribution, the brand currently has 110 clean, cruelty-free stockkeeping units, and additional top sellers are Peeper Perfect Under-Eye Concealer, Cheeky Rose Cream Blush, Universal Brow Pencil and White Tea Tinted Moisturizer.
“We are hitting our moment.”
“We’ve been the little engine that could. Everyone has purchased a balm or eyebrow pencil, and we are building an army of customers with the complexion products,” says Mackey. “The focus going forward is those longer-term products.”
Instagram and TikTok are Winky Lux’s chief digital customer acquisition channels. It has almost 127,000 TikTok followers and 452,000 Instagram followers. The brand’s primary customers are moms in their mid-thirties, but it has a broad audience that spans gen Z to boomer consumers. “It’s a psychographic, not a demographic,” says Mackey. “It’s a girly girl who’s been that way since she was 5.”
Winky Lux bootstrapped for its initial three years in business and subsequently raised $12 million in funding. Female Founders Fund and Notable Capital were among its investors. Prior to CircleUp selling to Brightflow AI, the company stopped lending early last year, and it previously provided Winky Lux a lien on 90% of the brand’s receivables. As a result of CircleUp’s ceasing to lend, the brand moved to a lender providing a lien on 60% of its receivables.
“It had nothing to do with the business. It had to do with the market being more conservative. It prevented us from being able to grow. We were sitting there, the company was profitable, and we were cracking, but we couldn’t invest in anything,” recounts Mackey. “We started to say, alright, we don’t want to be on this flywheel forever. We want a strong, deep-pocketed partner that can really support the business…Our customers would be like, ‘Your product is always sold out, I can never find it.’ We were struggling to keep our in-stock rates at a healthy level.”
Now, with CORE’s support, Mackey is certain Winky Lux is set to shine. “The trend has turned toward maximalism. That’s part of our heritage, and it’s part of the cultural zeitgeist now. It wasn’t when we launched,” she says. “We are hitting our moment.”
Leave a Reply
You must be logged in to post a comment.