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PORT WASHINGTON — A decade-old cosmetics company started in a Flushing garage by a South Korean immigrant is now exploring the possibility of a public offering, its owners said.
Kiss Products, which is growing at 25 percent to 30 percent annually and with about $65 million in expected 1999 revenues, sells mainly nail enhancement products like files, fake nails and stick-on decals. The money would aid Kiss’ effort to broaden into mainstream cosmetics and turn Kiss lip-balm and eye-liner into a household name like Maybeline. It would also fund a corporate acquisition, executives said.
"Our goal is to become a Fortune 500 company," said Kiss President Yong Jin Cheng, the company’s sole owner and older brother of Sung Yong Cheng, who founded Kiss in 1989. In confronting such competitors as Revlon, L’Oreal and Procter & Gamble, "you have to be very careful otherwise you’ll be killed," added Richard K. Kim, Kiss’ chief financial officer.
Executives said they haven’t yet hired an investment bank; discussions of an initial public offering are still internal and perhaps two years off.
At least one factor bodes well. One of Kiss’s biggest competitors in nail care products, Cosmar, went into bankruptcy liquidation proceedings along with its parent, Renaissance Cosmetics, earlier this year. With the competition’s demise, Kiss executives said their market share of the nail enhancement industry has increased about 5 percentage points to 30 percent. The nail care industry as a whole is worth $700 million a year, estimates Nails magazine, an industry trade publication.
Kiss’ history is noteworthy. Sung Yong Cheng, a chemist, owned a Flushing nail salon in 1989 when he first started experimenting with different formulas to create artificial nails. The results were well-accepted by customers, so Cheng began vending door-to-door to competing nail salons, benefiting from the boom in the Korean-owned salons that were bringing affordable nail coddling to the masses.
The Chengs received their big break in 1991, when Walgreen Co. began selling their line. Now three-quarters of Kiss products are sold in national chain stores like Target, Wal-Mart and drug stores including Duane Reade, CVS and Rite Aid. Another 10 percent are sold to salons and the remainder are exported to 40 countries.
Along the way, Kiss kept outgrowing its Queens quarters and in 1994 came to Nassau, completing last year its expansion into two 65,000 square-foot buildings in Port Washington on 3.3 acres of land it owns. Nassau County’s Industrial Development Agency and the Small Business Association granted it two 10-year financing packages worth nearly $7 million for the relocation. Last month Kiss received an award from the Long Island Business Development Council for most successful company.
As of late, Kiss has enhanced its marketing efforts, even licensing Mickey Mouse and other Disney characters to emblazon on its body art — mainly artificial tattoos — and fake nails. The strategy is aimed at capturing a quickly growing segment, that of 8- to 12-year-old girls.
"We’re ready to launch Toy Story II and we’re working on Dinosaur, which will be Disney’s big movie next summer," Kim said. Kiss is negotiating with two other undisclosed companies to reach licensing agreements and it plans to fan out into the sports licensing world as well, he said.
Kiss now employs about 200 in Port Washington and plans to hire another 40 in the next several months, possibly more if production moves to three shifts from two, Kim said. But Kiss’s U.S. production pales alongside its factory in Tianjin, China, where 2,500 employees hand-airbrush Kiss’s artificial nails.
Kiss has another small plant in South Korea, from where several of its top executives hail. The connection with their home country continues to be strong. Chang reads daily the Chosun News, a Korean paper, while Kiss’s main conference room has an imposing painting of a tiger on a mountain, a symbol of power in Korea.
