Kim Kardashian’s shapewear brand had quite the baptism of fire.
Originally unveiled in 2019, the Spanx rival was initially going to be called Kimono – a name that immediately received significant backlash from people accusing her of appropriating and disrespecting Japanese traditions.
At first she appeared to stand firm on her branding choice – but then switched to Skims before the products hit the shelves.
And while it started out as a shapewear brand – or solutionwear, as she’s described it - it’s quite quickly expanded its range beyond that focus to all types of clothes; from tops to trousers to pyjamas.
And it’s making a lot of money – or it seems to be, anyway.
They say they’re on track for more than $1 billion in revenue this year – and as a private company we kind of have to take their word on that.
We also don’t know how much of that is left in profit when all of the costs are taken away.
But clearly, it’s doing well enough to attract some major investors, keen to get involved.
Skims recently did a capital raise – selling shares or raising debt – to the tune of $225m. And when what the investors got for that money is multiplied it out, it gives the firm a $5 billion valuation.
And that’s a decent step up from the $4 billion valuation it had around two years ago – probably helped in no small part from the partnership it announced earlier this year with Nike.
That’s led to the creation of a whole new brand, NikeSkims – which is focused on activewear and performance shapewear.
Is that $5bn valuation realistic or is it just hype?
Company valuations are a tricky thing - and they don’t always have a lot of real-world logic attached to them.
Some would say a company’s valuation should be a multiple of its revenues or profits.
If it is making $1 billion a year, a valuation of $5 billion doesn’t seem unreasonable.
But, of course, we can’t say for sure that that figure is accurate – and there are reasons why we should be sceptical. But even if it is accurate, it would seem less impressive if it turned out that it was costing them $1.1 billion to secure those kinds of sales.
Basing a valuation on revenue is an inexact science, too.
When it comes to younger, faster growing companies, there’s an argument that it’s not fair to base their valuation on revenue or profit alone. The firm should be growing rapidly, so investors will say you have to look at their future potential too. That’s something that’s hard to predict.
And so these kinds of valuations can essentially end up little more than an educated bet that, while the company isn’t making huge money now, it will in the future.
And there’s no doubt Skims is growing rapidly.
It’s gone from being an online-only business to setting up partnerships with retailers – and now it’s focusing on expanding its own store footprint in the US and beyond.
Another factor that can influence valuations is who’s involved.
The fact that this is a Kim Kardashian-backed company gives its value a boost beyond what’s happening on its balance sheet… and the value would instantly plummet if she were to walk away from it.
In fact it would likely be the case that these kinds of fund-raising deals have conditions attached to ensure she stays involved for a set amount of time as a minimum.
And how much is Kim Kardashian getting from this?
Again, as a private company we aren’t yet privy to whatever pay-packet she might be getting from the company. In fact finding out exactly how big of a stake she has in the business isn’t particularly easy either.
What we do know is that Forbes’s Rich List values her at $1.9 billion – around $300m more than Taylor Swift.
And the valuation of Skims would be a big part of that figure; but she also has many other business interests, and countless revenue streams including endorsement deals, money from her TV work and what she makes through the likes of social media.
Let’s talk through some of her businesses – because she’s had many…
Yes – even before she was catapulted properly into the public consciousness with Keeping up with the Kardashians in 2007, she was running businesses.
A year before the show began she and her sisters Kourtney and Khloe set up Dash – a high-end clothing boutique in California, which eventually opened outlets in New York and Miami – but was eventually shuttered completely in 2018.
But once the TV show became a hit, the rate of company creations went through the roof. Often times she has launched businesses in a particular area, closed it down after a while, and then launched another, very similar business a short time later.
For example there was Khroma Beauty – a cosmetics line – which launched in 2012 but was hit with multiple copyright cases due to the existence of a similarly-named cosmetics brand.
It relaunched as Kardashian Beauty a year later, and did well initially – before fizzling out.
Then in 2017 Kim launched KKW Beauty – which, again, started quite well. To the extent that cosmetics giant Coty bought a 20% stake in it for $200m, which gave it a total value of $1 billion.
But then in 2021, she announced the brand was closing – and would come back under a totally new name, with a new line of products.
A year later, she launched SKKN by Kim – which was more of a skincare brand than a cosmetics brand. Again, that seemed to start well.
But in June of this year, the company announced it was winding down – but they promised that the "skin confidence that SKKN embodied will live on in new and exciting ways".
That 20% stake that Coty bought in KKW was bought by Skims – with Coty making a $71m loss on the investment.
And while SKKN is gone, Kardashian is still involved in the area via her private equity firm Skky Partners.
It has two investments listed on its site, one – Truff – a truffle-based sauce and condiments company and another, 111Skin, which is focused on "the gap between plastic surgery and skincare".
Outside of her own businesses, where else is she making money?
Well of course she was paid for her part in Keeping up with the Kardashians and its successor show, The Kardashians.
She is also now one of the stars of a new Disney+ legal drama 'All’s Fair’ – which has been described some some critics as the worst TV show ever made, and currently has a Rotten Tomatoes score of 3%.
But none of that has stopped her from becoming a massive global start – and crucially her popularity is focused on a demographic that companies want to get their products in front of.
And she has huge reach – not only through a massively popular TV show, but also through social media. She has 354 million followers on Instagram, for example, 10.4 million on TikTok, 72.1 million on Twitter.
So getting your product endorsed by her is seen as very valuable – and companies are willing to pay big money for that.
Of course there is a hierarchy in the world of endorsements.
You could be talking about long-term deals, where she becomes the face of a brand – features in ads, and turns up to events and so on.
That’s going to set you back million and millions of dollars… it might also involve you handing over some shares in your company too.
She’s probably been more selectively of her big endorsement deals in recent years – more recently partnering with major luxury brands like Balenciaga and Dolce & Gabbana.
In the past she’s done ads for Sketchers and vegan protein alternative Beyond Meat – and toilet-paper maker Charmin.
Though maybe the low was the Kardashian Kard she and her sisters created with Mastercard in the early years of their TV fame – which was a pre-loaded debit card with their picture on the front and ridiculously high fees attached.
What does an endorsement on social media cost?
As of a few years ago, a single post from her featuring your product could cost you upwards of half a million dollars.
That’s just for one post to social media – not an ongoing thing or being part of any official ad or campaign.
It’s hard to say for sure that that’s money well spent. At the same time we have seen multiple examples of companies – including some Irish ones – where they are suddenly inundated with demand for their products after being seen on, or in the hands of, Kim Kardashian.
Many fans of hers are desperate to copy as much as they can about her fashion choices and her lifestyle in general, so if they find a bag or a top or a skirt or even a toy that she has in a post, they will rush out to buy one as quickly as they can.
So while it might not be worth half a million dollars – it clearly does help with sales, at least temporarily.
Not bad for someone written off as a bit of a bimbo!
Not at all.
Of course Kim and her sisters started out at an advantage that most don’t have, but she’s also shown herself to be remarkably shrewd – and some would say ruthless – in a lot of her business moves.
And the family have been the subject of plenty of criticism too - from their promotion of needless consumption to what many see to be their negative impact on young people's beauty standards and body image.
But those criticisms don't seem to bother Kim or her family al that much. In fact, key to their success has been their ability to attract attention at all times – even if that’s by doing something many would consider outrageous or tasteless.
And there's a self-awarness there too. Kim doesn’t seem to be afraid of poking fun at her own image – or playing on her family’s reputation – if it means further boosting her profile or her bottom line.
So even when some of Kim’s TV dramatics or moments of ignorance end up as memes and reaction GIFs, that’s a good thing.
You mentioned the other Kardashians – how are they doing financially?
Not bad. They’re all fairly far behind Kim in terms of their net worth, but they’re not exactly on the breadline either.
The eldest, Kourtney, is valued at somewhere in the region of $65m. Her big business is her wellness and lifestyle website Poosh; she will also make money from endorsements, and with around 216 million followers on Instagram she’s probably making $300,000 dollars per post.
Khloe is estimated to be worth $60m – she has a number of clothing companies, and a protein popcorn brand fuelling that.
Half-sister Kendall Jenner is also said to be worth $60m – she also has a fashion line, and a tequila brand.
Really the only sibling (or half-sibling) that comes close to Kim is Kylie Jenner. She’s estimated to be worth $670m.
But that’s a lot less than she was previously valued at – and this represents a cautionary tale about taking the Kardashian-Jenner clan at their word when it comes to the sales their companies are making.
Because back in 2020, Kylie sold a majority stake in her Kylie Cosmetics brand to Coty (who seem to love doing business with the family).
At the time it was reported that the deal valued the business at $1.2 billion – and that the company had enjoyed sales of around $360m in 2018 alone.
Those two things combined led Forbes to declare Kylie as the youngest ever self-made billionaire.
But a few months later filings from Coty – which is publicly traded, and so required to be much more transparent about its finances – revealed that Kylie Cosmetics was far smaller than Jenner and the Kardashians had reportedly gone to great lengths to claim.
Instead of sales of $340m in 2018, sales were closer to $125m.
In 2019 they’d told reporters Kylie Cosmetics’ new skin care line had sales of $100m in its first month and a half – but it turned out the segment was probably looking at sales of $25m for the whole year.
Kylie did still come away with hundreds of millions of dollars after tax from the Coty deal – which is not to be sniffed at. And she still has a shareholding in what seems to be a profit-making business – just not as profitable as she had indicated.
As a result, she has been struck off the billionaires list.
