Spanx Is Reportedly Shopping Itself For $1 Billion, But Forbes Estimates The Shapewear Firm Is Worth Far Less – Forbes

Spanx Is Reportedly Shopping Itself For $1 Billion, But Forbes Estimates The Shapewear Firm Is Worth Far Less – Forbes

Last Friday, The New York Times’ DealBook reported that shapewear company Spanx is exploring options for a sale that would value the firm at $1 billion or more, with private equity firms Carlyle and TPG named as potential interested parties. But Forbes estimates the value of Spanx is only a little more than half of any potential 10-figure deal, mostly because sales at the firm have been on a downward trajectory in the past half-decade. 

The DealBook story reports that sources close to the company estimate Spanx’s revenue to be $300 million to $400 million over the last year. Those numbers are lower than analysts’ estimates for the firm’s sales from as early as 2015 and barely higher than in 2012, when it had sales of $250 million, as reported in Forbes’ first profile of the company. 

Its charismatic founder, Sara Blakely, who made Forbes’ World’s Billionaires list as the youngest self-made female billionaire that year, has been reluctant to share revenues of the company she owns. She has resisted previous calls to sell or take Spanx public, and the firm has traditionally been secretive about its financials, though a deal, if it goes through, may shed some light on Spanx’s operations. 

Amid an increasingly crowded shapewear market and with the Covid-19 pandemic roiling the retail industry, Blakely dropped off Forbes’ billionaire rankings in 2020. The pandemic shutdowns dealt a heavy blow to the shapewear market, as weddings, galas, graduations and other formal gatherings were cancelled around the world. U.S. sales of shapewear dropped 23% between July 2019 and July 2020, according to market research firm NPD Group. Phased reopenings in 2021 have slowed the decline, but sales of shapewear in the year ending May 2021 still decreased 3% compared to the prior year, NPD estimates. Forbes now values Spanx at $540 million, including a 10% discount that Forbes applies to all privately owned businesses, down from a $1 billion valuation in 2012. Spanx did not return a request for comment.  

“Shapewear struggled during the pandemic, as women traded in their special occasion wardrobe for sweats and slippers,” said NPD analyst Kristen Classi-Zummo. “Growth within shapewear is coming from brands that are offering less structured, more versatile options that provide everyday shaping benefits. Shapewear will still be in women’s closets, but the ability of brands to innovate and adapt to her new wardrobe will be crucial for the category.” 

The idea for Spanx came about in 1998, when Blakely cut off the feet of her control top pantyhose to make her first pair of shapewear. The shrewd businesswoman, who was once a door-to-door fax machine salesperson, began hawking her products on the sales floor of Neiman Marcus stores two years later. Spanx soon gained a celebrity following, counting Oprah Winfrey and Gwyneth Paltrow among its fans; Blakely later got her own taste of the spotlight as a guest judge on Shark Tank.

Sales grew at a brisk clip in the early years and into the 2010s, but the company, which had dominated the market, soon faced fierce competition. In 2018, Shapermint, the firm behind brands Empetua and Truekind, entered the scene. Two years later, Shapermint claimed it had grabbed 20% of the U.S. shapewear market with $150 million in 2020 sales, citing data from NPD Group. Other startups, like Y Combinator-backed San Francisco firm HoneyLove, also tried to compete for a slice of the pie.  

The biggest test for Spanx came in September 2019, when reality TV magnate Kim Kardashian West’s shapewear line Skims exploded onto the scene. The Kardashian marketing juggernaut — Kim has more than 231 million followers on Instagram alone — propelled Skims to become the hottest name on the market. It reportedly reeled in $145 million in 2020 revenue, and is aiming to more than double that figure in 2021. The fast growing brand notched a $1.6 billion valuation in April, after it raised $154 million in a new funding round. 

“Skims is a relatively new market entrant that has generated a lot of attention while Spanx, the market pioneer and still the largest player, is viewed as a legacy brand,” says Matthew Tingler, a managing director at financial services firm Baird. On Monday, Kardashian West announced that Skims will be outfitting American athletes at the upcoming summer Olympics in Tokyo.   

Blakely, who also owns other investments, including a minority stake in the NBA’s Atlanta Hawks, has a current net worth of $750 million, according to Forbes estimates. Her rival, however, has ridden 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 her shapewear’s growing valuation pushed her fortune over the 10-figure mark.     

Published at Tue, 29 Jun 2021 11:00:00 +0000