The DealBook of The New York Times reported last Friday that Spanx, a shapewear company, is looking into options to sell the company at $1 billion or more. TPG and Carlyle were named as potential buyers. However, Forbes says that Spanx’sSpanx’s value is less than half of any possible 10-figure deal. This is since sales have been declining for the last half-decade.
According to DealBook, sources close to Spanx estimate that the firm’s revenue is $300 million to $400million over the past year. These numbers are below analysts analyst’s estimates of the firm’s revenue from 2015 and just slightly higher than the 2012 sales of $250 million. Forbes’Forbes’ first profile on the company reported these figures.
Sara Blakely, the company’s charismatic founder, was named on Forbes’Forbes’ World’sWorld’s Billionaires as the youngest female billionaire. She has been reluctant to share the revenues of the company that she owns. She has resisted calls to sell or make Spanx public in the past. The firm has always been secretive about its finances, but a deal, if it is approved, might shed some light on Spanx’sSpanx’s operations.
Blakely was dropped from Forbes’billionaireForbes’billionaire ranking in 2020 amid a crowded market for shapewear and the Covid-19 pandemic that was roiling retail. The global pandemic shutdowns caused a severe blow to the shapewear industry. As a result, many weddings, galas and other formal events were canceled. According to NPD Group, the U.S. sales for shapewear fell 23% between July 2019 & July 2020. NPD estimates that shapewear sales decreased by 3% in the year ending May 20, 2021, despite the reopening of phases in 2021. Forbes values Spanx now at $540million, with a 10% discount that Forbes applies to all privately-owned businesses. This is down from a 2012 valuation of $1 billion. Spanx didn’t respond to a request for comment.
Kristen ClassiZummo, the NPD analyst, stated that shapewear suffered during the pandemic. Women traded in their special occasion clothes for slippers and sweatshirts. Shapewear brands are offering more flexible, less structured options that offer everyday shaping benefits. While shapewear will remain in women’s closets, the ability for brands to adapt and innovate to fit their new wardrobe will be key to the category’s success.
Blakely, a former top-seller for fax machines, cut the feet off her control pantyhose to create her first pair of shapewear. Two years later, the shrewd businesswoman began selling her products on the Neiman Marcus sales floor. Spanx quickly gained a celebrity following that included Oprah, Gwyneth Paltrow and Gwyneth Ashe. Blakely was later invited to Shark Tank as a guest judge.
The company sales grew rapidly in the beginning and into 2010, but it soon came under intense competition. Shapermint, the company behind Empetua, Truekind and Truekind brands, entered the market in 2018. Shapermint claimed that it had captured 20% of the U.S. market for shapewear with $150 million in 2020 sales. This was according to data from NPD Group. HoneyLove, a San Francisco-based startup backed by Y Combinator, tried to get a piece of the pie.
The most significant test for Spanx was in September 2019, when reality TV star Kim Kardashian East’sEast’s Skims shapewear collection exploded onto the market. Skims rose to prominence thanks to Kim Kardashian, a marketing juggernaut with over 231 million Instagram followers. According to reports, it earned $145 million in 2020 revenues and is planning to increase that number by more than twice in 2021. After raising $154 million in a fresh funding round, the brand is now valued at $1.6 billion.
Matthew Tingler, a managing director at Baird, says that “Skims” is a relatively new market entrant and has received a lot of attention. “Spanx, however, remains the market leader and is still regarded as a legacy player.” In addition, Kardashian West announced Monday that Skims would be dressing American athletes during the forthcoming summer Olympics in Tokyo.
Blakely also has other investments, including a minority stake at the NBA’sNBA’s Atlanta Hawks. According to Forbes, Blakely has a net worth of $750m. Kardashian West, however, became a new billionaire in April after her shapewear’s increasing valuation made it possible for her to reach the 10 figure mark.