Why Are Investors Backing Skims Expansion?

AlArabiya English

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00:00And do you know what's so interesting?

00:01I must admit something.

00:03I haven't bought Skims, but the competition that she's up against,

00:07Aloe and Lululemon, is something that I would buy and do buy and do wear.

00:12But what I find pretty fascinating about this whole story, Laurie,

00:16is there's so much investor confidence in this brand.

00:21And also, Skims' plan is to open more stores,

00:25which I found really interesting, especially in the economic climate.

00:30Yeah, it's a really good point because these are not fly-by-night investors

00:34who are putting money into this operation.

00:37We've got an arm of Goldman Sachs that was one of the biggest funders in this latest round.

00:43And what's happening is that Skims is not a publicly listed company.

00:48You can't buy shares in it on the stock market.

00:51So the people that have put money into it are investors like Goldman Sachs,

00:55a couple of other fairly big-name investors.

00:58So to expand, to do this expansion that you mentioned, these physical stores,

01:03Kim Kardashian and her co-founder have gone back to investors and have said,

01:08look, this is a great product.

01:10We'd like to expand it.

01:12Can you give us more money?

01:13Goldman Sachs and a couple of others said, yeah, sure, not a problem.

01:17So the valuation of Skims right now is about $5 billion U.S. dollars,

01:23at least based on this latest amount of money that went in there.

01:26And by the way, that's worth more than Lululemon and Under Armour,

01:30which are roughly competitors, combined.

01:34And I would think, I'm going to go out on a limb and say that this actually,

01:37that valuation of $5 billion, to me, seems a little bit conservative.

01:42I mean, they're looking at sales, net sales of over $1 billion a year.

01:47So the value of $5 billion is not in any way stretching things with those kinds of sales numbers.

01:53But, yeah, they're expanding into physical stores.

01:57And let's go back to Lululemon.

01:58This may be a cautionary tale because Lululemon listed on the Stock Exchange a couple of years ago,

02:04which is a great fanfare.

02:05Everybody loved the products.

02:07Although Lululemon, I think, is a little pricier than Skims.

02:11Lululemon did absolutely fine, but the shares over the past two years have fallen 60%,

02:18whether that's because there's more competition,

02:21whether it's, as you say, consumers have become a lot more cautious all over the world,

02:26sort of an open question.

02:28So the competition is out there looking at a lot of people saying,

02:31okay, Skims doesn't necessarily have to go to the stock market now

02:35because they can get this private funding.

02:38And I think, perhaps, given Lululemon's experience,

02:41the longer that Skims can stay off the public markets, perhaps the better.

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