Mary Kay

Mary Kay Inc.
Privately held company
Industry Multi-level marketing, Cosmetics and personal care products
Founded September 13, 1963 (1963-09-13)
Dallas, Texas, U.S.
Headquarters Addison, Texas, U.S.
Key people
 Mary Kay Ash, Founder
Richard R. Rogers, Executive Chairman
David Holl, CEO
Products Cosmetics, sunscreen
Revenue US$3.5 Billion in 2016[1]
Number of employees
 Staff 5,000
Salespeople 3.5 million worldwide (2015)[2]
Website www.marykay.com

Mary Kay Inc. is an American privately owned multi-level marketing company.[3] According to Direct Selling News, Mary Kay was the sixth largest network marketing company in the world in 2015, with a wholesale volume of US$3.7 billion.[1] Mary Kay is based in Addison, Texas, outside Dallas. The company was founded by Mary Kay Ash in 1963. Richard Rogers, Mary Kay's son, is the chairman, and David Holl is president and was named CEO in 2006.[4][5][6]

Business model

Mary Kay corporate headquarters in Addison, Texas

Mary Kay sells cosmetics through a multi-level marketing model. Mary Kay distributors (called beauty consultants) can potentially make income by directly selling to people in their community, and also receive a commission on wholesale purchases made by people they recruit into the distribution network. Mary Kay distributors must purchase a $100 starter kit in order to qualify.[7] As a private company, Mary Kay releases few details about the average income of its sellers.[7] In 2005, Mary Kay reported that its wholesale worldwide sales exceeded US$2.2 billion.[8] In 2010, worldwide wholesale figures were reported at US$2.5 billion.[4] In 2015, worldwide wholesale figures were reported at US$3.7 billion.[1] None of these figures take into account product returns.

The table below shows the company's reported sales figures in more detail.

Mary Kay Sales Figures
YearWholesale VolumeConsultantsDirectorsNational directorsWholesale volume / consultants
1963 $198,154[9]318[9]00$623.13
1973 unknown21,069[10]450(?)2(?)unknown
1983 $300,000,000[10]195,000[10]unknownunknown$1,538.46
1989 $400,000,000 200,000unknownunknown$2,000.00
1991 $511,000,000[11]220,000[11]unknownunknown$2,322.73
1992 $500,000,000[12]250,000[12]unknownunknown$2,000.00
1993 $735,000,000[10]325,000[10]unknownunknown$2,261.00
1994 $850,000,000[13]unknownunknownunknownunknown
1995 $950,000,000[13]unknownunknownunknownunknown
1995 Russia $25,000,000[14]unknownunknownunknownunknown
1996 $1,000,000,000[13]unknownunknownunknownunknown
1997 People's Republic of China $12,000,000[15]15,000unknownunknown$800.00
1998 People's Republic of China $7,200,000[15]unknownunknownunknownunknown
2001 USA Unknown500,000[16]unknownunknownunknown
2002 $1,600,000,000850,00019,000[17]more than 300[17]$1,882.35
2002 USA unknownunknown13,000[17]unknownunknown
2002 People's Republic of China $120,000,000[15]120,000[15] unknownunknown$100.00
2003 $1,800,000,0001,100,00018,500[18]More than 100[18]$1,636.36
2004 $1,960,000,000[19]1,300,000[20]27,000[8]410[20]$1,507.69
2004 USA unknownunknownunknown210[20]unknown
2004 Canada $125,000,000[21]29,357[22]661[22]16[22]$4,257.93
2004 United Kingdom $7,700,000[23]3,500[18]More than 70[18]0[18]$2,200.00
2005 $2,200,000,000[8]1,600,000[8]31,000[8]500[8]$1,375.00
2005 People's Republic of China $300,000,000[24]400,000[24]unknownunknown$750.00
2005 USA $1,300,000,000[24]715,000[24]unknownunknown$1,818.18
2005 Canada unknown32,820[25]673[25]17[25]unknown
2005 Argentina unknown20,000[26]500[26]8[26]unknown
2005 Mexico unknown175,000[27]unknownunknownunknown
2005 United Kingdom unknown5,000[28]140[28]2[28]unknown
2006 Worldwide $2,250,000,000[29]1,700,000 +[29]unknownabout 500[30]$1,323.53
2006 Canada CAD 62,000,000[31]34,272[25]724[25]18[25]CAD $1,809
2006 USA unknownunknown14,000+[30]unknownunknown
2006 UK unknown5000[28]140[28]2[28]unknown
2007 Canada unknown31891[32]659[25]25[25]unknown
2007 USA unknown700,00014,000[33]215[34]unknown
2007 Worldwide $2,400,000,000[34][34]1,700,000[34]unknownunknown$1,411.76
2008 Canada unknown30,679[35]608[35]24[35]unknown
2008 USA unknown600,000[36]13,000[36]unknownunknown
2008 Worldwide $2,600,000,000[37]1,800,000[37]34,000[37]500[37]$1,444.44
2009 Worldwide $2,500,000,000[38]2,000,000[38]37,000[38]600[38]$1,250.00
2009 China $600,000,000[39]200,000[39]unknownunknown$3,000
2010 Worldwide US$2,500,000,000[4]2,000,000[4]unknown600[4]US$1,250
2010 Australia A$25,000,000[40]10,000unknownunknownA$2,500
2010 Canada unknown29573[41]unknown24[41]revenue / consultants
2015 Worldwide $3,700,000,000[1]3,500,000[2]39,000[2]600[2]$1,057.14
Year Wholesale VolumeConsultantsDirectorsNational Directorsrevenue / consultants

Note: Unless otherwise stated, dollar amounts are in United States Currency, which has not been adjusted for inflation;

Manufacturing plants

The primary manufacturing plant is in Dallas, Texas. A second plant was opened in Hangzhou, China, to manufacture and package products for that market. A third plant was opened in 1997, in (La Chaux-de-Fonds) Switzerland, for the European market. The Swiss plant closed in 2003.

Cars

In 1968, Mary Kay Ash purchased the first pink Cadillac from a Dallas dealership, where it was repainted on site to match the "Mountain Laurel Blush" in a compact Ash carried. The Cadillac served as a mobile advertisement for the business. The following year, Ash rewarded the company's top five salespeople with similarly painted 1970 Coupe de Ville cars. GM has painted over 100,000 custom cars for Mary Kay. The specific shade has varied over the years from bubble-gum to near-white pearlescent effects. GM had an exclusive agreement to sell cars of the specific shade only through Mary Kay. The cars are offered to distributors as two-year leases, and distributors who choose to buy the cars are only allowed to resell them to authorized dealers. After the lease expires, the cars are repainted before being resold.[42]

Mary Kay has different incentive levels for its consultants. Independent Beauty Consultants can earn the use of a white Chevy Cruze, in August 2014 introduced the limited edition Lipstick Red color option also for limited time, or cash compensation of $375 a month. Independent Sales Directors can choose a black Ford Fusion, Chevy Equinox, or $500 a month. Top Independent Sales Directors can choose between the pink Cadillac CTS, or cash option of $900 a month.[43] The specific qualifications for earning the car depend upon the country, and vehicle that is desired. If those qualifications are not met, then the distributor has to pay for a portion of the lease of the car for that month. Meeting the qualifications entitles the distributor to pay no monthly lease and 85% of the car insurance, or a pre-determined cash compensation award.[44] In 2011, a solid black Ford Mustang was introduced as an incentive. In 2014, a black BMW was introduced in its place, although the pink Cadillac remains the top reward for those distributors whose units purchase over $100,000 or more in a year. There is no tracking by the company of actual sales.[45] Internationally, The cars available also varies depending on the regions and countries, such as the pink Luxgen S5 that was only available in Taiwan.

Earnings for salespeople

There are two ways for consultants to earn money in Mary Kay:

  • Recruiting
  • Retail sales

Recruiting commission earnings

"Recruiting commission earnings" reflects the commission and bonuses of 4, 9 or 13% that one earns from the wholesale purchases of their team or unit. These bonuses come straight from Mary Kay corporate and not from said consultants team or units pockets. It does not include income from retail sales nor does it include income from the Mary Kay tools business. In February 2010 Mary Kay (Canada) claimed the following incomes for its salesforce:[46]

  • 29,675 people were consultants during the year;
  • 1,878 consultants earned more than CAD 100 in commission;
  • 276 of the 553 sales directors earned more than CAD 17,471 in commission;
  • 15 of the 23 national directors earned more than CAD 100,000 in commission;

For Mary Kay (USA) National Directors, the 2006 median gross income (prior to business expenses) was $175,443.[47]

Retail sales earnings

Mary Kay consultants earn a 50% gross profit on products sold at full retail price. The quoted figure of US$1,057.14 per year (2015) for the average consultant was derived by dividing the annual wholesale sales by Mary Kay Inc., by the number of Mary Kay consultants. This figure does not take into account product returns, eBay, auctions, sales at a discount, and purchases by "personal use consultants" which would lower this figure.

Consultant turnover rate

A 68.6% per annum turnover figure has been calculated based upon information supplied by Mary Kay (USA) to the Federal Trade Commission.[48] An 85% per annum turnover figure has been calculated, based upon the data supplied by Mary Kay (Canada).[49] That document excludes individuals who earn a commission and are in the company for less than one year. It also excludes individuals who are in the company for more than one year but do not earn a commission check.

Court cases

Woolf v. Mary Kay Cosmetics

The 2004 court case Woolf v. Mary Kay Cosmetics was originally decided in favor of the plaintiff, Claudine Woolf. In doing so it marked the first time[50] that workplace rights could be applied to independent contractors who worked from their home. This decision was stayed and then reversed after an appeal. The Supreme Court denied certiorari on 31 May 2005.[51] In this case, Woolf was terminated from her position as director because her unit failed to make production for three consecutive months. Woolf contended that her firing was illegal, because of her medical condition — she was suffering from cancer.

Liquidator court cases

In May 2008, Mary Kay, Inc., sued Touch of the Pink Cosmetics, a website that sells product from former Mary Kay consultants at heavily reduced prices. The company claims that Touch of Pink interferes with its business by offering to purchase inventory from discontinued consultants, and that Touch of Pink's use of the Mary Kay trademark in reference to Mary Kay products it sells is deceiving.[52] The jury found in favor of Mary Kay and awarded a judgement of $1.139 million.[53]

On 20 July 2009, Mary Kay, Inc., sued Pink Face Cosmetics for trademark infringement.[54] The specific issue appears to be the use of the Mary Kay name, in selling Mary Kay products on eBay and other Internet venues for less than the wholesale cost of the products.

Animal testing

In 1989, the company announced a moratorium on animal testing of its products, after pressure from animal rights groups. They were among the first in their industry to do so and to sign the PETA pledge. In 2012, when the company expanded into China, the Chinese government required Mary Kay to comply with Chinese law that requires animal testing on all health and beauty products. The Chinese government carries out this testing, not Mary Kay. Thus Mary Kay has been removed from PETA's "Don't Test on Animals" list to the "Do Test" list.[55]

References

  1. 1 2 3 4 Business for Home, Jan 2, 2017: Direct Selling Companies Revenue 2016, Retrieved 2018-01-03
  2. 1 2 3 4 Mary Kay Company Quick Facts Mary Kay Company Quick Facts Retrieved 2017-01-28
  3. ↑ [https://www.michigan.gov/ag/0,4534,7-359-81903_20942-208400--,00.html
  4. 1 2 3 4 5 2011 Press Kit The Company Archived July 14, 2011, at the Wayback Machine.
  5. ↑ Mary Kay Company Information page Archived August 8, 2007, at the Wayback Machine.
  6. ↑ Mary Kay At-A-Glance — June 2006
  7. 1 2 Hicken, Melanie (10 January 2013). "The money behind Herbalife, Mary Kay and others". CNN Money. Retrieved 12 April 2014.
  8. 1 2 3 4 5 6 MK Corporate Press Kit 2006 Archived July 11, 2007, at the Wayback Machine.
  9. 1 2 "Mary Kay Ash". 20th Century American Leaders Database. Harvard Business School. Retrieved 2010-10-20.
  10. 1 2 3 4 5 Mary Kay Corporate Milestones Archived August 7, 2007, at the Wayback Machine.
  11. 1 2 Camerius, James W.; Clinton, James W. (1993). "Avon Products, Inc: Developing a Global Perspective" (PDF). Washington, DC: Direct Selling Education Foundation. Archived from the original (PDF) on 5 October 2010. Retrieved 2010-10-20.
  12. 1 2 Flynn, Keli (2010-05-30). "Mary Kay Cosmetics". Handbook of Texas Online. Denton, Texas: Texas State Historical Association. Archived from the original on 22 August 2009. Retrieved 2010-10-20.
  13. 1 2 3 "Company Retrospective". Mary Kay (UK). Archived from the original on 26 December 2007. Retrieved 2010-10-20.
  14. ↑ Stanley, Alessandra (1996-08-14). "Avon and Mary Kay Create Opportunities for Women". The New York Times. p. D1. Retrieved April 10, 2014.
  15. 1 2 3 4 "China consumer goods: Still off the doorstep". Economist Intelligence Unit. Economist Group. 2005-06-21. Retrieved 2010-10-20. (Subscription required (help)).
  16. ↑ Patton, Susannah. "Providing Mary Kay Employees with Own Webpages Saves Millions". cio.com. Retrieved 5 April 2018.
  17. 1 2 3 Mary Kay Inc. (2001-11-22). "Mary Kay Inc. 2003 Fact Sheet" (Press release). Retrieved 2010-10-20.
  18. 1 2 3 4 5 "Just the FAQs". Mary Kay (UK). Archived from the original on 2013-01-18. Retrieved 2010-10-20.
  19. ↑ Family Business Archived January 5, 2009, at the Wayback Machine.
  20. 1 2 3 Mary Kay Corporate Press Kit 2005
  21. ↑ Kaye, Marcia (Winter 2005). "Parent Time: Mary Kay Cosmetics". Today's Parent. Archived from the original on 8 January 2009. Retrieved 2010-10-20.
  22. 1 2 3 Mary Kay (Canada) Reported earnings 2004
  23. ↑ "Mary Kay Cosmetics (U.K.) Ltd". Hoovers, Inc. Retrieved 2010-10-20.
  24. 1 2 3 4 Glick, Julia (2006-08-04). "More Chinese Women Donning Mary Kay Uniforms". The San Diego Union-Tribune. Associated Press. Archived from the original on 2011-04-30. Retrieved 2010-10-20.
  25. 1 2 3 4 5 6 7 8 Mary Kay (Canada) Reported earnings Archived 2007-09-29 at the Wayback Machine.
  26. 1 2 3 "En Contacto". 7 July 2003. Archived from the original on 7 July 2003. Retrieved 5 April 2018.
  27. ↑ Mary Kay (Mexico)
  28. 1 2 3 4 5 6 "The Mary Kay Opportunity". Mary Kay (UK). Archived from the original on 2013-01-18. Retrieved 2010-10-20.
  29. 1 2 "Company Information". Mary Kay. Archived from the original on 2007-04-28. Retrieved 2010-10-20.
  30. 1 2 "2007 Press Kit" (PDF) (Press release). Mary Kay. 2007. Archived from the original (PDF) on 2008-06-27. Retrieved 2010-10-20.
  31. ↑ Mary Kay Around The World Archived 2013-01-15 at Archive.is
  32. ↑ Mary Kay (Canada) Reported earnings Archived May 14, 2008, at the Wayback Machine.
  33. ↑ "March 2008 Directors Commission" (PDF). Applause. Mary Kay. July 2008. p. 17. Retrieved 2010-10-20.
  34. 1 2 3 4 Oberbeck, Steven (2008-05-15). "Utah woman a star in pink". The Salt Lake Tribune. Sequence, Inc. Retrieved 2010-10-20.
  35. 1 2 3 2008 Earnings Representation Archived 2012-03-16 at the Wayback Machine.
  36. 1 2 Johnson, Grant (2009-01-01). "Beauty Secrets | Mary Kay's Rhonda Shasteen works on brand makeover". Directmag.com. Retrieved 2010-10-20.
  37. 1 2 3 4 Mary Kay, Inc. 2008 Fact Sheet Archived March 25, 2009, at the Wayback Machine.
  38. 1 2 3 4 "MARY KAY: The Company,2010 United States Fact Sheet" (PDF). Archived from the original (PDF) on 2011-07-14. Retrieved 2010-07-13.
  39. 1 2 Barboza, David (26 December 2009). "Direct Selling Flourishes in China". The New York Times. Retrieved 12 May 2010.
  40. ↑ Speedy, Blair (2 March 2011). "Mary Kay Survives Retail Slump". The Australian. Retrieved 3 March 2011.
  41. 1 2 "Earnings Representation". Mary Kay Inc. February 2012. Archived from the original on 2012-03-16.
  42. ↑ Clanton, Brett (27 June 2006). "Mary Kay Inc. Loves Cadillac, and the Feeling Is Mutual". The Ledger. Retrieved 21 May 2014.
  43. ↑ "Mary Kay Sales Director Earnings: Less Than Minimum Wage". Pink Truth. 13 November 2015. Retrieved 5 April 2018.
  44. ↑ Brochure: Mary Kay Career Car Plan Guidelines — February 2005.
  45. ↑ "Ford Mustang revs up as Mary Kay's newest ride". www.leftlanenews.com. Retrieved 5 April 2018.
  46. ↑ Earnings Representation Archived 2012-03-16 at the Wayback Machine.
  47. ↑ "US National 1206 Commission" (PDF). archive-it.org. Archived from the original (PDF) on 3 July 2007. Retrieved 5 April 2018.
  48. ↑ Mary Kay Letter to the FTC regarding proposed changes in the rules governing MLMs. Archived July 3, 2007, at the Wayback Machine.
  49. ↑ Mary Kay Canadian Earnings Archived 2007-09-29 at the Wayback Machine.
  50. ↑ "Law.com". Law.com. Retrieved 5 April 2018.
  51. ↑ Order List:544 US
  52. ↑ Mary Kay Inc. v. Amy L. Weber, Scott J. Weber and Touch of Pink Cosmetics, 601 F Supp. 2d 839 (N.D. Tex February 20, 2009).
  53. ↑ LJ (April 4, 2009). "Mary Kay Wins Lawsuit Against Touch of Pink Cosmetics". PinkLighthouse. Retrieved April 10, 2018.
  54. ↑ "Mary Kay Suing Another Product Liquidator". Pink Truth. July 23, 2009. Retrieved April 11, 2018.
  55. ↑ Vartan, Starre. "Avon, Estee Lauder and Mary Kay under fire for animal testing", The Miami Herald, Miami, 27 February 2012. Retrieved 8 March 2012.



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