Spanx would buy himself for $ 1 billion, but Forbes believes the shapewear business is worth a lot less
Last Friday, The New York Times’ DealBook reported that shapewear firm Spanx was exploring options for a sale that would value the company at $ 1 billion or more, with private equity firms Carlyle and TPG being cited as potential interested parties. But Forbes estimates that Spanx’s value is just over half of any potential 10-figure deal, mainly because the company’s sales have been on a downward trajectory over the past half-decade.
The DealBook article reports that sources close to the company estimate Spanx’s revenue to be between $ 300 million and $ 400 million in the past year. These numbers are lower than analysts ‘estimates for the company’s sales as early as 2015 and barely higher than in 2012, when it had $ 250 million in revenue, as shown in Forbes’ first profile of the society.
Its charismatic founder, Sara Blakely, who made Forbes’ The list of world’s billionaires as the youngest self-made billionaire woman that year was reluctant to share the revenue of the business she owns. It has resisted previous calls to sell or float Spanx, and the company has traditionally kept its finances a secret, although a deal, if struck, may shed light on Spanx’s operations.
Amid an increasingly crowded fitness clothing market and with the Covid-19 pandemic disrupting the retail industry, Blakely has given up Forbes’ ranking billionaires in 2020. Pandemic closures have taken a heavy toll on the shapewear market, as weddings, galas, graduation ceremonies and other official gatherings have been canceled around the world. Sales of shapewear in the United States fell 23% between July 2019 and July 2020, according to market research firm NPD Group. Gradual reopenings in 2021 slowed the decline, but shapewear sales in the year ending May 2021 were still 3% lower from the previous year, NPD believes. Forbes Now values Spanx at $ 540 million, including a 10% discount that Forbes applies to all private companies, down from a valuation of $ 1 billion in 2012. Spanx did not return a request for comment.
“Shapewear struggled during the pandemic, as women swapped their special occasion wardrobes for sweatshirts and slippers,” said NPD analyst Kristen Classi-Zummo. “The growth in fitness clothing comes from brands that offer less structured, more versatile options that provide everyday fitness benefits. Shapewear will always be in women’s closets, but the ability of brands to innovate and adapt to their new wardrobe will be crucial for the category.
The idea for Spanx originated in 1998, when Blakely cut the feet of her high-control tights to make her first pair of shapely underwear. The savvy businesswoman, who was once a home fax salesperson, began selling her products in Neiman Marcus stores two years later. Spanx quickly gained fame, counting Oprah Winfrey and Gwyneth Paltrow among her fans; Blakely later got her own taste of the spotlight as a guest judge on Shark Tank.
Sales grew at a steady pace in the early years and into the 2010s, but the company, which had dominated the market, soon faced stiff competition. In 2018, Shapermint, the firm behind the Empetua and Truekind brands, entered the scene. Two years later, Shapermint claimed to have captured 20% of the U.S. fitness market with $ 150 million in sales in 2020, citing data from NPD Group. Other startups, like HoneyLove, the San Francisco company backed by Y Combinator, have also tried to compete for a piece of the pie.
The biggest test for Spanx came in September 2019, when reality TV mogul Kim Kardashian West’s shapewear line Skims exploded onto the scene. The marketing juggernaut Kardashian – Kim has over 231 million followers on Instagram alone – has propelled Skims to become the hottest name in the market. It is believed to have generated $ 145 million in revenue in 2020 and aims to more than double that figure in 2021. The fast-growing brand recorded a valuation of $ 1.6 billion in April, after raising $ 154 billion during the year. ‘a new round of funding.
“Skims is a newcomer to the market that has garnered a lot of attention while Spanx, the market pioneer and still the biggest player, is seen as a traditional brand,” said Matthew Tingler, managing director of the company. Baird financial services. On Monday, Kardashian West announced that Skims will equip American athletes at the upcoming Summer Olympics in Tokyo.
Blakely, who also owns other investments including a minority stake in MLB’s Atlanta Hawks, has a current net worth of $ 750 million, according to Forbes estimates. Her rival, however, carried her success in the industry that Blakely created to an entry at the Three Comma Club – in April, Kardashian West became a new billionaire after the rising valuation of her fitness clothing pushed her fortune. above the 10-digit mark.