Each week, Just Style’s editors select a deal that illustrates the themes driving change in our sector. The deal may not always be the largest in value, or the highest profile. But we select it because of what it tells us about where the leading companies are focusing their efforts, and why. We pick apart the deal itself, and the industry theme behind it. This new, thematic deal coverage is driven by our underlying Disruptor data which tracks all major deals, patents, company filings, hiring patterns and social media buzz across our sectors. 

Inside the Skims deal

Kim Kardashian’s shapewear brand Skims has reportedly raised a $270m funding package that values the brand at $4bn according to The New York Times.

Skims, which was founded in 2019 as a direct-to-consumer shapewear brand in partnership with Jens and Emma Grede, offers shapewear and underwear in sizes XXS to 5XL and, it has been hailed for its inclusivity and body positivity messages.

The brand launched in Nordstrom in 2020, its first retail partnership. It then evolved, around the time of the pandemic, to offering much-demanded loungewear. Then in 2022 it moved on to offering swimwear. And in January this year, it launched an activewear collection.

By 2022 it had reportedly raised nearly $400m in venture capital funding. Then, last week, it was rumoured Skims had landed a $270m funding round led by Wellington Management and backed by Greenoaks Capital Partners and D1 Capital Partners and Imaginary Ventures.

According to The New York Times, Skims is preparing to open flagship store locations in Los Angles and New York, launch a menswear collection and is also weighing an IPO.

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Here’s why the Skims shapewear funding deal matters

While Greenoaks Capital nor Skims responded to request for comment, there can be no doubt the funder recognises Skims as arguably the most noteworthy brand to launch within the shapewear space since Spanx. It has taken a successful product and evolved it in line with market needs and demands.

In the last year alone, 11m people joined the waitlist for Skims and sales for the brand are projected to grow to $750m this year from $500m last year.

Alice Price, associate apparel analyst, at GlobalData tells Just Style exclusively Skims came into the market at a time when shapewear lacked inclusivity and was “largely synonymous with the concealment and restriction of natural curves.”

“Skims reinvented the shapewear market, by accentuating and celebrating the female body through its collections. With Kim Kardashian as the face of the brand, Skims represents a lucrative opportunity for investors, as celebrity-owned brands prove extremely popular among consumers, with Rhianna’s Fenty beauty, Kylie Kardashian’s Kylie Cosmetics and Selena Gomez’s Rare Beauty all testament to the power of celebrity.”

She goes on to explain the brand further appeals to consumers since its moved to offering underwear and loungewear. Its focus on comfort and its use of soft and flexible materials speak to consumers that continue to favour relaxed styles since the pandemic.

But GlobalData retail analyst Neil Saunders believes while the brand is attracting a lot of investor interest, it is unlikely to be in any hurry to go public.

He tells Just Style: “It will need to be assured that there is an appetite from investors and that it can achieve a solid valuation. In short, Skims is an exciting company in a consumer market that is currently quite flat.”

While Kardashian herself is a major selling point, investors, he adds, are seeing potential in the shapewear category per se as it is a growth area of the market that fits in “with several consumer trends.”

He continues: “Skims is expanding beyond shapewear so investors see a lot of potential for future growth.”

Key takeaways for the fashion industry

Skims sits in a category that is relatively underpenetrated with phenomenal growth opportunities.

According to Grandview Research, the global shapewear market was valued at $1.9bn in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 8.0% from 2021 to 2028. By 2028 Grandview Research forecasts revenues of $3.7bn for the category.

“While technological advancements and fit have fuelled the business, the concept of shapewear is changing as well,” the report reads. “Shapewear businesses have been pushed to question traditional preconceptions and present their products in a more approachable, modern way as a result of cultural developments toward body positivity and inclusion, attracting a new set of customers.

So what do brands need to do to enjoy a slice of the success shapewear is experiencing?

Well, firstly, you need to be in it to win it. In the near term we can expect a number of household names partner with smaller and medium-sized businesses to either enter the shapewear category or expand their product offering.

Collaborations are likely between fashion brands, Saunders says. But when it comes to more brands dabbling in the shapewear space, the likes of NIKE and adidas will likely link any shapewear launches to sports performance and comfort.

“I think there is a big difference between pure shapewear and sports apparel that represents something of a barrier for mainstream brands to enter this space. While there is some overlap, the audiences for the two categories are different.”

Innovation will also be a key determiner of a successful shapewear brand. Grand View Research points to examples like Skins International which has launched a line of compression clothing infused with fabric that is warp knitted with several fine-quality yarns for enhanced performance. While Sankom Switzerland has produced a line laced with aloe vera which is antimicrobial and soothing for the skin.

Finally shapewear brands must be “fluid” and ready to move with the times. Consumer demand is constantly changing and shapewear has gone from once being restrictive to now all-embracing of different shapes, sizes and skin tones. It is essential brands work closely with their consumers and remain ready to react to evolving tastes.

More research:

Apparel Industry Mergers and Acquisitions Deals by Top Themes in Q1 2023 – Thematic Intelligence