The Rise of Lingerie Investors, Raising Hundreds of Millions of Dollars to Scale

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Lingerie and loungewear start-ups are making waves in the underwear world.

This week alone, Rihanna’s Savage x Fenty lingerie and Kim Kardashian’s Skims innerwear brands revealed hundreds of millions of dollars ($365 million collectively) in additional funding to help scale their businesses. Those might be the biggest names, but there’s also Parade, ThirdLove, Cuup and Sofia Vergara’s EBY, among others. These are all intimates brands that have secured millions of additional investment dollars in the last few years.

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Rihanna’s Savage x Fenty lingerie brand is raising funds in order to scale. Growth strategies include opening brick-and-mortar stores, the first of which open in Las Vegas this month. - Credit: Courtesy Photo
Rihanna’s Savage x Fenty lingerie brand is raising funds in order to scale. Growth strategies include opening brick-and-mortar stores, the first of which open in Las Vegas this month. - Credit: Courtesy Photo

Courtesy Photo

Larger companies are getting in the games, too. Stakes have been claimed in names like Lively, Spanx and Playful Promises in an attempt to capitalize off of the momentum. Blackstone bought a majority stake in Spanx in November 2021 for an undisclosed sum, valuing the shapewear brand at $1.2 billion.

Meanwhile, a handful of other digital innerwear darlings are rumored to be courting investors in the hopes of finding a buyer on the public market.

Danielle Bernstein’s new intimates collection includes a selection of bras and underwear, in addition to other lingerie and sleepwear. - Credit: Courtesy Photo
Danielle Bernstein’s new intimates collection includes a selection of bras and underwear, in addition to other lingerie and sleepwear. - Credit: Courtesy Photo

Courtesy Photo

At the same time, everyone from Danielle Bernstein’s We Wore What brand to established players like Zara and Karl Lagerfeld are entering the lingerie space, eager to take share from a market that has historically been dominated by Victoria’s Secret and HanesBrands. There’s also a growing number of niche innerwear businesses, offering things like period-panties, gender-free underwear and subscription lingerie services. Anyone who says the pandemic-induced-innerwear moment is over is clearly mistaken.

“People are still shopping lingerie,” Todd Mick, executive director of fashion apparel at market research firm NPD Group, told WWD. “The customer just wants that comfort lifestyle; wants that lounge lifestyle. And there’s that sort of mixing up of lounge, sleep and active that’s really becoming a wardrobe staple.

“And lingerie is a self-care purchase,” he added. “It’s something that’s very intimate. Putting on lingerie is kind of that first layer to feeling great and looking good.”

The U.S. women’s intimate apparel category, which includes sleepwear, grew 16 percent in fall 2021, year-over-year. (Sleepwear alone was up 30 percent in that same timeframe, 69 percent during the last week of December 2021, year-over-year.) That’s on top of two years of solid growth where the category grew by approximately $5 billion. And while sales in the innerwear industry will likely decelerate in the first half of 2022 — thanks to supply chain headwinds and post-holiday consumer shopping fatigue — Mick said the momentum will likely pick up in the back half of the year. NPD is anticipating the category to grow by 3 percent to 5 percent each year.

“That’s kind of a steep change of growth for categories that were traditionally very mature and stable,” Mick said. “The truth is the [lingerie] business is still in a very, very healthy structure. And intimates was actually a category that continued to do well during COVID[-19].”

Luxury lingerie brand Cosabella now offers underwear in sizes that fit across all body forms. - Credit: Courtesy Photo
Luxury lingerie brand Cosabella now offers underwear in sizes that fit across all body forms. - Credit: Courtesy Photo

Courtesy Photo

Comfort continues to be a consumer favorite. But so are lace and push-up bras (up 4 percent in fall 2021, year-over-year). Mick added that “hybrid” bras, or bras that offer both support and style are increasingly sought after.

“Women do want to look pretty and they’re looking for more lace-embellished and push-up styles that give them shape. And that’s indicative of them wanting to go out into the world,” he said.

Meanwhile, Rihanna and Kardashian are using their star power and social media skills to convince intimates shoppers to buy their version of sexy undergarments — and control more and more of the lingerie experience. Even pre-pandemic, both superstars have been able to speak to an era where many consumers have collectively rejected rigid beauty standards, often opting for comfort instead.

Professional skateboarder Nyjah Huston in Rihanna’s Savage x Fenty Vol. 3 lingerie fashion show. - Credit: Kevin Mazur / Getty Images
Professional skateboarder Nyjah Huston in Rihanna’s Savage x Fenty Vol. 3 lingerie fashion show. - Credit: Kevin Mazur / Getty Images

Kevin Mazur / Getty Images

It’s little surprise then that both Savage and Skims have revealed plans to expand internationally, open brick-and-mortar stores and move into new categories, including men’s basics. (Rihanna launched men’s in fall 2020, while Kardashian hinted at men’s shapewear in 2019.)

But the notion that lingerie giant Victoria’s Secret is dead in the water, is far from true. In fact, it’s still the market share leader in the U.S. women’s intimate apparel market. And while Victoria’s Secret has lost share in recent years — from roughly 32 percent in 2015 to its current 21 percent, according to NPD Group’s consumer-tracking service — the business is still sizable.

Grace Elizabeth models for Victoria’s Secret while pregnant, a first for the lingerie brand. - Credit: Courtesy Photo
Grace Elizabeth models for Victoria’s Secret while pregnant, a first for the lingerie brand. - Credit: Courtesy Photo

Courtesy Photo

The firm, which spun off of Bath & Body Works in August to become a stand-alone company on the public market, is in the midst of a major transformation, trying to rebrand itself as the ultimate advocate for women in an attempt to win back consumers — and still has substantial sales volume to show for its efforts.

Victoria’s Secret topped out in 2016 with $7.78 billion in annual revenues and more than 1,100 stores around the country. While much smaller today, Victoria’s Secret generated approximately $1.4 billion in revenues in the most recent quarter, helping the retailer log $75 million in net profits. It also has more than 900 stores around the nation and a market cap of $4.48 billion.

The digital darlings, by contrast, are receiving outsized attention with little public information regarding their sales — or if they’re even profitable.

“The one cautious thing about funding versus revenue is that Victoria’s Secret is 20 percent of the market. That’s a really large business,” Mick said. “Whereas, a lot of these digital native brands are in that sort of $200 million to $500 million range. So they’re still relatively small, compared to the big guys.”

NPD uses checkout data to track sales volumes at various brands.

Tamera McLaughlin is a Savage x Fenty ambassador, the first little person to model the lingerie brand. - Credit: Courtesy Photo twitter.com
Tamera McLaughlin is a Savage x Fenty ambassador, the first little person to model the lingerie brand. - Credit: Courtesy Photo twitter.com

Courtesy Photo twitter.com

“When I think of what Rihanna is great at, one is, she does an incredible job of inclusivity, size diversity, body diversity,” Mick said. “Her lingerie is very popularly priced. It’s very affordable. And it’s on the sexy side. So, yes, that’s kind of playing in Victoria’s Secret’s space.

“But I think for [Victoria’s Secret], while they’re building back up in their sexy business, they’re growing in that more comfort, lounge, wire-free area, as well,” he continued. “That’s an area that they never played in at all. And that represents about 50 percent of the market. So there’s huge growth potential for Victoria’s Secret.”

Mick added that all of these brands will need to continue to innovate in order to keep up with the competition.

Aerie is owned by American Eagle Outfitters. - Credit: Courtesy Photo AEO
Aerie is owned by American Eagle Outfitters. - Credit: Courtesy Photo AEO

Courtesy Photo AEO

“It’s really about understanding their assortment and growing their assortment in ways that attract new customers to the assortment,” he said. “Aerie [owned by American Eagle Outfitters] has done a good job of that. They’ve taken a core bra business and built and built and built upon the merchandising segment. And that’s why Aerie is so accessible and that’s what these smaller brands need to be doing.

“When we look at our top 25 brands, in the [lingerie] brands that we track, generally, half are doing well and half are not doing well,” Mick added. “When we look at the past year, all of the brands have [had] positive sales comps. So, there’s all this new activity, with the Rihannas, with the Parades [of the world], with Aerie. But the truth is, everyone is doing well, because the consumer is really voting in this category.”

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