Not long after Kim Kardashian West launched her shapewear brand Skims in 2019, pandemic locks carried its body-fitting product line to the back of consumers’ closets.
But Skims survived. On top of that, it has become a billion dollar business.
The company raised $ 154 million in new funds, which, according to Kardashian West, raised its valuation to $ 1.6 billion. That’s a significant amount for a not-quite-two-year-old clothing brand, even one run by someone with her star power.
It also confirms Kardashian West’s status as a billionaire in its own right. In announcing her entry into the club this week, Forbes estimated the value of Skims at less than that. She will remain the largest shareholder in Skims after the agreement, and she and her business partner, Jens Grede, will have a majority stake.
Skims benefited from a timely introduction of pajamas and casual wear, with product lines such as the ‘cozy collection’ boosting sales as women swapped a fit for sweatpants. But shapewear has made Skims famous, and it remains the company’s central product range.
“We are your basics,” she said. Kardashian West said in a Zoom interview when she was preparing for a photo shoot, even though “we are still able to maintain the core shape.”
To justify its valuation, she is counting on a normal return – or, at the very least, to push back into tight-fitting clothing – to maintain momentum.
Skims is not the first billion dollar business associated with the Kardashian Empire, or with Ms. Kardashian West does not. She sold a minority stake in her cosmetics center to makeup giant Coty and valued it at $ 1 billion. Her sister Kylie Jenner sold a majority stake in her own cosmetics center, also to Coty, in a deal valued at $ 1.2 billion.
Skims is also not Kardashian West’s first clothing game. She and her sisters Khloé and Kourtney had a line with Sears that was essentially a licensing transaction over which she had little control.
Me. Kardashian West said she was deeply involved with Skims, from assisting with the design of materials and collections to selecting photographers for product shots to studying sales data. (And like most things in Kardashian, Skims was sometimes a family affair: Kanye West, Mrs Kardashian West’s now estranged husband, was ‘super involved’ in the beginning and criticized early designs for Skims packaging. , she said.)
Skims is one of several new clothing brands for e-commerce – a group that also includes Heist Studios and Honeylove – to see an opportunity in the shapewear venture, which has been dominated by one company, Spanx, for decades. Before 2020, when shapewear sales fell by 30 percent, the category, according to NPD, consistently generated just over $ 500 million in sales, or 3 percent of total clothing sales. Like other new ventures, Skims was targeted at the younger end of the market.
Skims has defined itself with the emphasis on inclusivity and offers nine sizes, up to 5x, in as many skin color shades. Grede put two million names on its waiting lists within the first nine weeks. To date, Skims has sold more than four million units, with a customer retention rate of more than 30 percent. Skims products are also sold at the Nordstrom and Selfridges high-end stores in the UK and several online retailers.
In business today
Skims faced challenges before the pandemic. The one was from the production of me. Kardashian West: the company originally called Kimono, until accusations of cultural appropriation prompted her to change the monk. (‘Even when it seemed innocent to me,’ she said, ‘people did not see it that way.’)
In addition to the declining sales of molded clothing during the pandemic, the company also experienced delays in sourcing raw materials for its materials, which hampered the ability to develop, manufacture and eventually sell new products.
“We had to invent different factories and get creative,” Kardashian West said. Nevertheless, Skims reported $ 145 million in sales last year and expects to double sales to $ 300 million this year.
By last fall, the potential investors were put on the company. Me. Kardashian West and Mr. Grede eventually teamed up with Thrive Capital, the venture capital firm that supports consumer firms such as spectacle brand Warby Parker and cosmetics firm Glossier. (Ms. Kardashian West’s social circle includes Thrive founder Joshua Kushner and his wife, model Karlie Kloss.)
The round also includes funding from two existing investors, Imaginary Ventures and Alliance Consumer Growth.
“We are constantly impressed with Skims’ ability to connect with consumers on a personal level and keep them coming back for more,” said Nabil Mallick, a partner of Thrive, in a statement.
What’s next for Skims depends on how the pandemic reformed the clothing market. “Shapewear, which is really being bought for an event, declined during the pandemic and declined significantly,” he said. Grede said. He expects that a final “rebalancing” of sales in the various categories of products, with demand, will return. Signs from retailers like Anthropologie, which said last month that seven of its top ten best-selling items are online dresses, suggest the buyer may be planning to dress more formally.
Kristen Classi-Zummo, an analyst at NPD, took a more cautious approach and reckoned that the category would bounce back, although customers who have become accustomed to comfort will insist on comfortable clothing, even if they are busy with some aspects of shapewear.
“I think we will dress again,” she said. Classi-Zummo said, “but I think it will look and feel different.”
Me. Kardashian West said she hopes to build Skims into a “multi-generational brand that will last a very long time.”
But she did not rule out eventually selling the business – as long as she retained a role in the business. “I think I’m definitely open to the conversation,” she said. But “I will never want to give up my process. I would hope that everyone we work with one day will also believe in it. ‘