Spanx Founder Sara Blakely Says Business Will Expand With Denim And More

Spanx is renowned for its form-fitting shapewear. But according to founder Sarah Blakely, he’s making a huge leap into other clothing categories, including denim, in the hopes of making all clothing more comfortable for women.

The company, founded in the late 1990s, is also well positioned to further expand its direct consumer sales division, reducing its dependence on discount retailers and other wholesale partners such as department stores. Direct selling to the consumer is usually more profitable. It also means that Spanx has developed a stronger relationship with its customers.

These were the two main reasons the investment firm decided to acquire a controlling stake in Spanx, Blackstone said. The investment, announced Wednesday, puts Spanx at $ 1.2 billion.

“There are not many brands that have successfully made this transition,” Anne Chang, global head of Blackstone’s Consumer Business, said in an interview Friday on CNBC’s Squawk Box.

“What we really saw was that the consumer followed the company and the brand … whether they made shapewear, leggings or jeans, and they followed all the products and were very loyal,” Chang said.

Blakely said about 70% of Spanx’s sales come from direct consumers. Spanx used to be dependent on department stores and other wholesale partners. But in recent years, he has invested more in his own website. It’s a similar shift major consumer brands like Nike, Coach and Levi Strauss are making to forge closer customer relationships and save more money from every transaction.

The deal marks Blackstone’s latest move to support the women-led business. He follows investments in media conglomerate Whitney Wolf Heard Bumble and Reese Witherspoon in media conglomerate Hello Sunshine.

Blakely launched Spanx in 1998 with just $ 5,000 from fax sales. At the time, her vision was to create a product for women to wear under clothing that would help them feel more comfortable. She cut off the legs of a pair of controlled top tights to create her prototype. The resulting product immediately became a hit with women.

Since then, Spanx has expanded its range to include outdoor wear, denim and even shapewear for men. Product innovation will remain a priority, Blakely said.

“We kind of defined a category and revolutionized it, and now we’re doing it in the apparel and outdoor space,” she told CNBC. “Our consumers are saying, ‘Add Spanx magic to the clothes I wear.’

As more women seek out comfy items to add to their wardrobe, the shapewear space is becoming 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 into shapewear through the Bali and Maidenform brands.

“A lot of people fall into this category and quickly leave it after about two years, because shapewear is really easy to make, but very difficult to get it right,” Blakely said.

When the Blackstone deal is closed, Blakely will retain a significant stake in the company and will continue to oversee the operations. She will move to the position of executive chairman.