Mary Kay

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Mary Kay Inc.
Type Private
Founded Dallas, Texas (1963)
Headquarters Addison, Texas
Key people Mary Kay Ash, Founder
Richard R. Rogers, CEO
David Holl, COO
Industry Personal care products
Products Skin care, cosmetics, nail care, sun protection, perfume
Revenue unknown
Employees Independent sales force of 1.6 million worldwide (2005)
Website Mary Kay Inc.

Mary Kay is a brand of skin care and color cosmetics sold by Mary Kay Inc. Mary Kay World Headquarters is located in the Dallas suburb of Addison, Texas. Mary Kay Ash (d. November 22, 2001) founded Mary Kay Inc. on Friday, September 13, 1963. Richard Rogers, Mary Kay's son, is chairman and CEO, and David Holl is president and COO.[1].

In 1968, the company went public, being traded on the over the counter market. By 1976 it was large enough to be traded on the New York Stock exchange. In 1985, Ash took the company private through a leveraged buyout. As a private company, Mary Kay Inc. does not make all of its financial information available to the public.[2]

The company's history was portrayed in the Shirley MacLaine movie Hell on Heels: The Battle of Mary Kay.[3]

Contents

Mary Kay Entered the market
Year Market Year Market Year Not Known Market
1963 USA ? Switzerland
1971 Australia 1993 Norway ? Slovakia
1978 Canada 1993 Singapore ? Netherlands
1980 Argentina 1993 Russia ? Moldavia
1984 Uruguay 1993 UK ? Lithuania
1986 Germany 1994 Brazil ? Latvia
1988 Malaysia 1994 Japan 2001 Korea
1988 Mexico 1995 China ? Estonia
1988 Thailand 1995 Portugal ? Dominican Republic
1991 New Zealand 1996 Finland
1991 Guatemala 1997 Czech Republic
1991 Taiwan 1997 Ukraine
1992 Spain 1998 Brazil
1992 Sweden 1999 El Salvador
1993 Bermuda 1999 Hong Kong
1993 Brunei 2000 Kazakhstan
1993 Chile 2000 Philippines
1993 Guatemala 2002 Uzbekistan
1993 Malaysia 2006 Poland
1993 New Zealand 2006 India

A grey market serves vendors of Mary Kay Cosmetics in other countries.

The original nine skin care products were based upon a recipe from a tanner, whose skin was much smoother, and clearer than his age would indicate. In the United States, roughly 200 products are currently available. In other countries, fewer products are available, because they are reformulated to meet local laws or, more commonly, consumer preferences. For example, Asian makeup is sometimes much whiter than European makeup. African (the continent) makeup has traditionally been more ochre than European makeup.

Some products, such as Mary Kay Whitener, are created for a specific country, or geographic region. Other products, such as the Mary Kay Limited Edition, are created to reflect seasonal changes.

In the early nineteen nineties, recognizing that the majority of both its customers, and consultants were women of color, Mary Kay introduced colors that were more suitable for that market.

PETA celebrated a semi-victory in the cosmetics industry in 1989, when Mary Kay Cosmetics announced a moratorium on animal testing.[4] The sought-for victory --- fur coats are not prizes --- came in 1996, when Mary Kay stopped offering fur coats as incentive awards for its sales force [5]. The final push may have been a series of embarrassing cartoons that appeared in newspapers across the country in the years immediately preceding the ban. In 1989 they were published in The Night of the Mary Kay Commandos[6] by Berke Breathed. A famous line from the book reads Even their Uzis are pink.

In 1995, to adhere to the laws of The People's Republic of China, Mary Kay opened a plant in Hangzhou to manufacture and package products. A European plant was opened in 1997, in La Chaux-de-Fonds, Switzerland, to serve the European market but was closed in 2003.

In 2005, wholesale sales of Mary Kay products to the consultants exceeded $2.2 billion.[7] This $2.2 billion figure does not account for products returned by consultants to the company.[8]

Mary Kay Sales Figures
Year Wholesale Volume Consultants Directors National Directors Wholesale volume / Consultants
1963 $198,154[9] 318[9] 0 0 $623.13
1973 unknown 21,069[10] 450(?) 2(?) unknown
1983 $300,000,000[10] 195,000[10] unknown unknown $1,538.46
1989 $400,000,000[11] 200,000[11] unknown unknown $2,000.00
1991 $511,000,000[12] 220,000[12] unknown unknown $2,322.73
1992 $500,000,000[13] 250,000[13] unknown unknown $2,000.00
1993 $735,000,000[10] 325,000[10] unknown unknown $2,261.00
1994 $850,000,000[14] unknown unknown unknown unknown
1995 $950,000,000[14] unknown unknown unknown unknown
1995 Russia $25,000,000[15] unknown unknown unknown unknown
1996 $1,000,000,000[14] unknown unknown unknown unknown
1997 China $12,000,000[16] 15,000 unknown unknown $800.00
1998 China $7,200,000[16] unknown unknown unknown unknown
2001 $1,400,000,000 800,000 unknown unknown $1,750.00
2001 USA Unknown 500,000[17] unknown unknown unknown
2001 Mexico $20,000,000[18] unknown unknown unknown unknown
2002 $1,600,000,000 850,000 19,000[19] more than 300[19] $1,882.35
2002 USA unknown unknown 13,000[19] unknown unknown
2002 China $120,000,000[16] 120,000[20] unknown unknown $100.00
2003 Just under $1,800,000,000 1,100,000 18,500[21] More than 100[21] $1,636.36
2004 $1,960,000,000[22] 1,300,000[23] 27,000[7] 410[23] $1,507.69
2004 USA unknown unknown unknown 210[23] unknown
2004 Canada $125,000,000[24] 29,357[25] 661[25] 16[25] $4,257.93
2004 United Kingdom $7,700,000[26] 3,500[21] More than 70[21] 0[21] $2,200.00
2005 $2,200,000,000[7] 1,600,000[7] 31,000[7] just under 500[7] $1,375.00
2005 China $300,000,000[27] 400,000[27] unknown unknown $750.00
2005 USA $1,300,000,000[27] 715,000[27] unknown unknown $1,818.18
2005 Canada unknown 32,820[28] 673[28] 17[28] unknown
2005 Argentina unknown 20,000[29] 500[29] 8[29] unknown
2005 Mexico unknown 175,000[30] unknown unknown unknown
2005 United Kingdom unknown 5,000[31] 140[31] 2[31] unknown
2006 Worldwide US$2,250,000,000[32] 1,700,000 +[32] unknown about 500[33] $1,323.53
2006 Canada unknown 34,272[34] 724[34] 18[34] unknown
2006 USA unknown unknown 14,000+[33] unknown unknown

Notes:

  • Dollar amounts are in United States Currency;
  • Dollar amounts have not been adjusted for inflation;
  • Official Mary Kay, Inc. policy is to round up their gross Wholesale volume.;
  • Official Mary Kay, Inc. policy is to round down the number of consultants;

In 1968, Mary Kay Ash purchased the first Pink Cadillac, where it was repainted on site, by the dealership owner, to match the Mountain Laurel Blush in the compact.[35] It was such a good rolling advertisement that Mary Kay Ash decided to reward her top five producers, by providing them with a Pink Cadillac paid for by the company in 1969. Pink was an obvious color choice --- matching the company's eye and lip color palettes. Since 1980, the shade used by the Mary Kay fleet has been exclusive to Mary Kay. Every two years, a Director or National can requalify for a new Cadillac. When the two year lease has expired, the cars are repainted, prior to being auctioned off. The shade of pink has changed over the years. In 1998, the color was changed to "pearlized pink". In honor of its 35th anniversary, the Mary Kay edition, white GMC Jimmy sport utility vehicle was offered in the United States. In 2007, the color changed to either black, or smoky platinum, depending upon which model the consultant chose to lease.

The Mary Kay pink Cadillacs available to qualified directors.
The Mary Kay pink Cadillacs available to qualified directors.

In the United States, the 2006 vehicle choice consisted of a Pontiac Vibe, Pontiac Grand Prix or a Cadillac. A Mary Kay director that qualifies for a car may choose from a Cadillac DTS, a Cadillac CTS, or a Cadillac SRX. In 2007 the offered cars were Saturn Vue, Pontiac G6, Pontiac Vibe, Cadillac CTS, and Saturn Aura.[36]

The current (2005)GM (USA) fleet size is 9,870.[37]

In the United Kingdom, Germany, The Netherlands, and Spain, the car is a pink Mercedes-Benz. In Argentina, one receives a pink Ford, while in Taiwan, it is a pink Toyota.[38]. In Australia, one gets to choose between a Ford Falcon, or Volkswagen Beetle.[39] In China, the vehicle is a pink Volkswagen Santana. In the Nordic countries you receive a pink Volvo V50.[40]

The specific qualifications for earning the car depend upon the country, and vehicle that is desired. If those qualifications are not met, then the Car Driver has to pay for a portion of the lease of the car for that month. Meeting the qualifications entitles the Car Driver to pay no monthly lease and 85% of the car insurance, or a pre-determined cash compensation award.[41]

Since the program's inception, more than 100,000 Independent sales force members have qualified for the use of a Career Car or elected the cash compensation option.[8] It is not known how many Directors select the cash option in lieu of the car, but GM estimates that it has built 100,000 pink Cadillacs for Mary Kay.[35]

Mary Kay reveals as little about the financial side of the company as it can. As a consequence, there is very little reliable information about actual earnings by consultants.

There are two ways to earn money in Mary Kay:

  1. Retail sales;
  2. Recruiting;

In both instances, the potential income is affected by the consultant turnover rate.

"Recruiting commission earnings" reflects the commission and bonuses that one earns from the wholesale purchases of their downline. It does not include income from retail sales. It does not include income from the Mary Kay tools business.

A press release [42] claimed the following for Canada in 1999:

Of the 16,000+ consultants:

  • The majority earned less than $199 Canadian;
  • 173 Sales Directors earned more than $19,000 Canadian;
  • 3 national directors earned more than $100,000 Canadian;

In an April 2005 press release, Mary Kay (Canada)[43] claimed the following for Canada in 2004:

Of the 299,357 independent Mary Kay Consultants:

  • 2,267 earned more than $150 Canadian;
  • 331 Sales Directors earned more than $15,500 Canadian;
  • 8 National Directors earned more than $100,000 Canadian;

In an April 2006 press release, Mary Kay (Canada)[43] claimed the following for Canada in 2005:

Out of 32,821 independent Mary Kay Beauty Consultants:

  • 2,356 earned more than $100 Canadian;
  • 336 Sales Directors earned more than $17,000 Canadian;
  • 15 National Directors earned more than $100,000 Canadian;

In a February 2007 press release, Mary Kay (Canada)[43] claimed the following for Canada in 2006:

Out of 34,272 independent Mary Kay Beauty Consultants:;

  • 2,422 earned more than $100 Canadian;
  • 362 Directors earned more $16,500 Canadian;
  • 16 National Directors earned more than $100,000 Canadian;

For Mary Kay (USA) Nationals, the 2006 median gross income (prior to business expenses) is $75,443.[44]

There is no reliable data for earnings from retail sales. The quoted figure of US$1,375 per year for the average consultant was derived by dividing the annual wholesale sales by Mary Kay Corporate, by the number of consultants in Mary Kay. This figure is obviously incorrect, as it does not take into account product returns, eBay, auctions, sales at a discount, and purchases by "personal use consultants" --- all of which would lower this figure

A 68.6% turnover figure has been calculated based upon information supplied by Mary Kay (USA) to the FTC.[45]

An 85% turnover figures has been calculated, based upon the data supplied by Mary Kay (Canada).[43] 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.

Individuals who qualified as National Director, prior to the age of sixty, are given the status of National Director Emeritus at age sixty five. This status entitles them to a retirement income that is equal to 100% of the average of the last five years prior to retirement[citation needed]. That monthly is paid to the retiree or their surviving family for 15 years.[citation needed] There is no retirement plan for other consultants.


A number of criticisms have been leveled at the company by current and former Mary Kay Consultants. The following is a list of some of the more controversial aspects of the company.

Woolf v. Mary Kay Cosmetics, No. 00-5612-J (Dallas Co., Texas, Dist. Ct.) was originally decided in favor of the plaintiff. In doing so it marked the first time[46] that workplace rights could be applied to independent contractors who worked from their home. This decision was stayed, then reversed on appeal.[47][48] The Supreme Court USA ruled Certiorari Denied 31 May 2005.[49]

In this case, Ms Woolf was terminated from her position as director, because her unit failed to make production for three consecutive months. Ms Woolf contended that her firing was illegal, because of her medical condition --- she was suffering from cancer.

Section 10:2:ix of the Director's Agreement[50] reads as follows: ix) If, for any reason, SD shall leave and remain outside the US for a total of 90 days or more during any period of (12) consecutive calendar months. Termination under this section 10.2 shall be effective at Company's option upon mailing to Sales Director written notice of termination or at such other subsequent date as may be specified in such notice, except in the case of termination for failure to maintain Minimum Sales Unit Production, in which case termination maybe made effective by Company as of the last day of the last full calendar month that Sales Director's Sales Unit failed to meet Minimum Sales Unit Production.

One of the effects of that clause, is that several Mary Kay Consultants who are in the United States National Guard, and were called to serve in Iraq, have had their directorship terminated. Because Mary Kay Beauty Consultants are Independent Contractors, the Uniformed Services Employment and Reemployment Rights Act does not appear to be applicable.

One of the criticism of Mary kay Cosmetics is that it is a product based pyramid scheme. This criticism is based upon the pressure to purchase more inventory than one can expect to sell at the MSRP within a reasonable period of time.

Several levels of inventory packages have been established for the new US based Beauty Consultant:

  • Pearl Star : US$4,800 Wholesale;
  • Emerald Star : US$3,600 Wholesale;
  • Diamond star : US$3,000 Wholesale;
  • Ruby Star : US$2,400 Wholesale;
  • Sapphire Star : US$1,800 Wholesale;
  • US $1,200 Wholesale;
  • US $600 Wholesale;

From the data in the Mary Kay Sales Figure Table above, it appears that the typical US Consultant purchased $1818 (wholesale) of product in 2005. This implies that an initial inventory purchase of $1,800 will turn over once per year. This also implies that there is no economic justification for purchasing an initial inventory of more than $1,800, and that for maximum profitability, a lower initial inventory purchase should be made.


The commission income of Sales Directors is directly linked to the wholesale inventory purchases of their downline. Retail sales are irrelevant to the amount of commission that is earned.

When placing a product order, Mary Kay makes no attempt to ascertain whether or not prior purchases have been sold to bona fide third party retail customers. This means that the company can not comply with either the Amway Safe Harbor Defense,[51] nor the more lenient 50% rule, in any FTC action against them.

In accordance with FTC regulations, and State Laws[52] Mary Kay offers a 90% refund for products purchased within the previous 12 rolling month period. The value of the products are calculated on the basis of the lowest wholesale price at which they were offered.

One effect of a product return is that everybody who earned a commission on the initial wholesale inventory order has to repay that commission.

California Penal Code 327: Every person who contrives, prepares, sets up, proposes, operates any endless chain is guilty of a misdemeanor. As used in this section, an 'endless chain' means any scheme for the disposal or distribution of property whereby a participant pays a valuable consideration for the chance to receive compensation for introducing one or more additional persons into participation in the scheme or for the chance to receive compensation when a person introduced by the participant introduces a new participant. Compensation, as used in this section, does not mean or include payment based upon sales made to persons who are not participants in the scheme and who are not purchasing in order to participate in the scheme.

In a 2005 article,[53] SmartMoney.com online magazine outlines one of the criticisms of Mary Kay: There's another way to earn income from Mary Kay: by recruiting new consultants. Recruiters earn a percentage of each inventory purchase made by the consultants they have recruited. And when recruits start assembling teams of their own, the first recruiter makes a commission on the inventories purchased by the recruits' recruits, and so on.

According to the Federal Trade Commission, a pyramid scheme is a multilevel marketing plan in which the main way of earning money is by recruiting new distributors of a product. The best way to tell if a multilevel marketing company is a pyramid scheme is to find out how most of its sales reps make money — by selling the product to end customers or by bringing in fresh recruits, says Robert FitzPatrick, president of Pyramid Scheme Alert, a consumer organization, and author of False Profits[54] The FTC has a similar anti-MLM article[55]. The majority of Mary Kay products are eventually sold to customers, FitzPatrick say; but during the past few years, there's been a noticeable shift in focus from selling to recruiting.

After years of silence, Mary Kay distributors are now coming forward to report abuses of inventory loading, pressure to recruit other MK salespeople, large financial losses and a company culture that blames its own victims. [56]


  1. ^ Mary Kay Company Information page
  2. ^ Mary Kay At-A-Glance - June 2006
  3. ^ http://entertainment.msn.com/movies/movie.aspx?m=531083
  4. ^ http://www.peta.org/about/victories4.asp
  5. ^ http://www.furisdead.com/history.asp
  6. ^ http://www.amazon.com/Night-Commandos-Featuring-Smell-O-Toons/dp/0316107387 The Mary Kay Commandos
  7. ^ a b c d e f MK Corporate Press Kit 2006
  8. ^ a b Mary Kay At-A-Glance - June 2006
  9. ^ a b http://www.hbs.edu/leadership/database/leaders/23/
  10. ^ a b c d e Mary Kay Corporate Milestones
  11. ^ a b Torrington HR Report
  12. ^ a b Avon Product Report
  13. ^ a b U Texas Article
  14. ^ a b c Mary Kay (UK)
  15. ^ Avon and Mary Kay
  16. ^ a b c http://www.eiu.com/index.asp?layout=IWArticleVW3&article_id=1289170114&refm=iwIndustry&industry_id=40000004
  17. ^ CIO
  18. ^ US Mexico Chamber of Commerce
  19. ^ a b c http://business.baylor.edu/Richard_Easley/CB%20Articles/marykaycosmetics.htm
  20. ^ http://www.eiu.com/index.asp?layout=IWArticleVW3&article_id=1289170114&refm=iwIndustry&industry_id=40000004
  21. ^ a b c d e Mary Kay (UK)
  22. ^ Family Business
  23. ^ a b c Mary Kay Corporate Press Kit 2005
  24. ^ http://www.todaysparent.com/lifeasparent/workfinance/article.jsp?content=20041104_123921_4584&page=5
  25. ^ a b c Mary Kay (Canada) Reported earnings 2004
  26. ^ Hoovers Mary Kay (UK) Reports
  27. ^ a b c d More Chinese Women Donning Mary Kay Uniforms
  28. ^ a b c Mary Kay (Canada) Reported earnings
  29. ^ a b c Mary Kay (Argentina)
  30. ^ Mary Kay (Mexico)
  31. ^ a b c Mary Kay (UK)
  32. ^ a b Company Information
  33. ^ a b | 2007 Press Kit
  34. ^ a b c Mary Kay (Canada) Reported earnings
  35. ^ a b Ledger Article
  36. ^ Brochure: Mary Kay Career Car Plan Guidelines - July 2007
  37. ^ Mary Kay GM Fleet
  38. ^ Mary Kay (United Kingdom)
  39. ^ Mary Kay (Australia)
  40. ^ Mary Kay Nordic
  41. ^ Brochure: Mary Kay Career Car Plan Guidelines - February 2005.
  42. ^ [2]
  43. ^ a b c d Mary Kay Canadian Earnings.
  44. ^ | US National 1206 Commission
  45. ^ [http://www.ftc.gov/os/comments/businessopprule/522418-11952.pdf Mary Kay Letter to the FTC regarding proposed changes in the rules governing MLMs.
  46. ^ Fired Mary Kay Worker Wins Lawsuit
  47. ^ Northern District of Texas 301 cv 688-57
  48. ^ [http://www.5thcoa.courts.state.tx.us/cgi-bin/as_web.exe?c05_05.ask+D+800147 Court of Appeals Fifth District of Texas at Dallas No. 05-03-01099-CV], October 20, 2004.
  49. ^ |Order List:544 US
  50. ^ | Director's Agreement
  51. ^ Webster v. Omnitrition, 79F.3d 776, 782, 784 (9th Cir, 1996)
  52. ^ |Texas
  53. ^ Rethink the Pink
  54. ^ False Profits
  55. ^ FTC on MLMs
  56. ^ Mary Kay Distributors Document Losses and Abuse -- End Silence
Retrieved from "http://en.wikipedia.org/wiki/Mary_Kay"
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