Kim Kardashian’s Skims Chasing $4 Billion Valuation In Pre-IPO Round
Kim Kardashian is inching that much closer to Wall Street.
The mega influencer’s Skims brand is in the midst of a round of fundraising that is set to value the fast-growing innerwear business at close $4 billion, multiple sources told WWD.
While the round has not yet closed, Boston-based mutual funds and family offices are said to be investing in what would be a pre-IPO fundraise, setting the company’s value anew ahead of a potential offering over the next six to 12 months.
Skims raised $240 million in a Series B fundraising round in January 2022, valuing the company at $3.2 billion at that time.
Representatives for Kardashian did not immediately respond to requests for comment.
While the company’s valuation is set to increase rapidly from round to round — and could potentially move much higher again in an eventual offering on Wall Street — the business is growing even faster.
The brand is said to be on track to produce sales of close to $1 billion this year with a growth rate of about 100 percent — without any permanent retail base.
By comparison, Victoria’s Secret & Co. saw its sales fall 6 percent to $6.3 billion last year and currently has a market capitalization of $1.6 billion.
Kardashian has built the four-year-old business with a mix of online popularity and genuine commercial savvy that has clearly upset the status quo in innerwear and fashion.
While Kardashian is front and center — most recently posting with well-oiled models for a Skims swimwear campaign shot by Steven Klein — she has a powerhouse team with her, including cofounder Jens Grede and his wife, founding partner Emma Grede. The couple also cofounded Khloé Kardashian’s Good American denim brand and contemporary casualwear label Frame.
Jens, who serves as chief executive officer of Skims, told WWD in 2021: “Our dream is to develop a few generation-defining brands. If the ’90s had Guess, Victoria’s Secret and Calvin Klein, I want today to be defined by Good American, Skims and Frame.”
That’s a big ambition and one that Skims could certainly help fulfill if it keeps its growth up.
Carmen Electra and Jenny McCarthy for Skims. Courtesy
An IPO would give Skims a new platform, a new kind of currency — with stock that is easily traded — and a new audience of Wall Street traders.
If the brand’s sales continue to double, growing potentially through retail and matching Kardashian’s global reach, stock traders will love the business all the more.
But they are also a fickle bunch and can turn quickly on businesses that come with big growth prospects and big promises, but falter in some way or even just don’t meet those expectations.
A wave of IPOs in 2021 — including buzzy names like Warby Parker Inc. and Allbirds Inc. — ran headlong into the realities of the market and have seen their valuations plummet.
Still, the IPO cycle seems to be starting back up despite worries about consumer spending, high interest rates and the rest of it.
Most of the players seen as IPO candidates this time though appear to have better growth prospects than the direct-to-consumer players that dominated the wave of offerings two years ago.
Birkenstock is said to be weighing its options with bankers and could go for an offering and fast-fashion giant Shein could also make its introduction, with some speculating that would be an IPO with a valuation in the $60 billion area.
Some companies have already successfully debuted — including the for-profit thrift store Savers — and others are seen as in the wings monitoring the interest in fashion’s new guard, such as Rihanna’s Savage x Fenty.
But much depends on the market, which can be fickle as lingering inflation, high interest rates, consumer sentiment and geopolitical and economic pressures all interact ceaselessly and unpredictably.
Kim Kardashian modeling in Skims’ latest swim campaign, shot by Steven Klein.
In the meantime, Kardashian is clearly keeping busy as she also is reported to be ready to part ways with her Coty Inc.
In 2021, the beauty giant acquired a 20 percent stake in Kim Kardashian’s beauty business, then called KKW Beauty, for $200 million, implying that the brand was valued at $1 billion at the time.
But reports are circulating that the billionaire is in talks to regain total ownership of her beauty business.
Coty and a rep for Kardashian did not immediately respond to request for comment on the reports on the beauty business, which first appeared in The Wall Street Journal.
Nevertheless, Ashley Helgans, an analyst at Jefferies, speculated that it could be an attractive option for Coty, which is currently mulling a dual listing in New York and Paris.
“Though the value of the brand is likely lower today, debt paydown is a priority for Coty and the repurchase could help accelerate deleveraging efforts,” she said.
Skkn by Kim Kardashian. Photo courtesy of Skkn by Kim
Since Coty became involved in the business, it has expanded into luxury skin care with a pricey launch with Skkn. Coty CEO Sue Nabi previously said it is performing above expectations and that one of the bestselling products is in fact not a product, but the full line, which retails at $673.
For the time being, it has paused makeup and fragrance, but there have been reports lately that new launches are in the works.
“Assumptions were that the brand would eventually return to makeup and fragrance,” Helgans said. “We estimate brand sales today are a fraction of what they were in 2021 due to the suspension of the KKW brand and the price for the 20 percent stake would be less than the $200 million paid to Kim back then.”
The arrangement with Kardashian is similar to the one that Coty struck with her sister, Kylie Jenner. Coty bought a 51 percent stake in Jenner’s business, Kylie Cosmetics, for $600 million in 2019.
Most recently, Coty raised guidance for the fourth quarter and full fiscal-year 2023. The group now expects 12 percent to 15 percent like-for-like sales growth for the three months ended June 30, and 10 percent to 11 percent like-for-like sales gains for the full fiscal year.
The talks with Coty are separate from the ongoing fundraising round for Skims.
Source: WWD
