Spanx is famous for its form-fitting shapewear. But according to founder Sara Blakely, it’s making a huge push into other categories of apparel — including denim — in hopes of making all clothing more comfortable for women.
The business, founded in the late 1990s, is also positioned to keep expanding its direct-to-consumer arm, lessening its reliance on discount retailers and other wholesale partners, such as department stores. Direct-to-consumer sales are typically more profitable. This also means Spanx has formed closer relationships with its customers.
According to Blackstone, those were two key reasons why the investment firm decided to take a majority stake in Spanx. That investment, announced Wednesday, values Spanx at $1.2 billion.
“There aren’t very many brands that have been able to successfully make that transition,” Ann Chung, Blackstone’s global head of its consumer division, said in an interview Friday on CNBC’s “Squawk Box.”
“What we really saw was that the consumer was following the company and the brand … whether they were putting shapewear out, or leggings out, or jeans out, and they were following all the products and being very loyal,” Chung said.
About 70% of Spanx’s sales are from direct-to-consumer channels, according to Blakely. Spanx used to depend on department stores and other wholesale partners. But in recent years, it has invested more into its own website. That’s a similar shift that major consumer brands — including Nike, Coach and Levi Strauss — have been making to build tighter relationships with customers and keep more money from each transaction.
The deal is Blackstone’s latest move to back women-run businesses. It follows investments in Whitney Wolfe Herd’s Bumble and Reese Witherspoon’s Hello Sunshine media conglomerate.
Founder of Spanx Sara Blakely.
Paul Morigi | Getty Images
Blakely launched Spanx in 1998 with just $5,000 in her pocket, which she had earned from selling fax machines. Her vision at the time was to create a product for women to wear under clothing, that helped them feel more comfortable. She chopped the legs off a pair of control-top pantyhose to create her prototype. The resulting product was an immediate hit with women.
Spanx has since expanded its assortment to include activewear, denim and even men’s shapewear. According to Blakely, product innovation will continue to be a priority.
“We kind of defined a category and revolutionized it, and we’re now doing that in apparel and active,” she told CNBC. “Our consumers have been saying, ‘Put the magic of Spanx in the clothing that I’m wearing.'”
As more women seek out comfortable pieces to add to their wardrobes, the shapewear space has grown even more competitive. Reality TV star Kim Kardashian West has a brand called Skims, which was recently valued at $1.6 billion. HanesBrands has expanded to shapewear through its Bali and Maidenform brands.
“A lot of people go into this category and quickly exit it after about two years, because shapewear is really easy to make, and really hard to get right,” Blakely said.
When the deal with Blackstone closes, Blakely will maintain a significant stake in the company and continue to oversee operations. She will transition to serve as executive chairwoman.