The Pre-IPO Valuation Trap
Skims is pivoting. The $4 billion valuation assigned during the 2023 funding round is no longer sufficient for an exit in today’s high-yield environment. As of November 4, 2025, the shapewear market has hit a saturation ceiling. The appointment of Diarrha N’Diaye as Executive Vice President of beauty and fragrance is not just a talent acquisition. It is a calculated attempt to arbitrage valuation multiples. Apparel companies typically trade at 1.5x to 2.5x revenue. Beauty conglomerates like L’Oréal or high-growth independents often command 5x to 8x. By rebranding as a ‘lifestyle ecosystem’ rather than a garment manufacturer, Skims is attempting to engineer a massive paper gain before a 2026 public listing.
The N’Diaye Alpha
Why Diarrha N’Diaye? The move signals a defensive play against the ‘clean beauty’ fatigue currently hitting the markets. N’Diaye, the founder of Ami Colé, brings a specific operational expertise in high-margin, melanin-rich formulations. This is a segment that Bloomberg analysts noted as one of the few resilient pockets in the Q3 2025 retail slump. However, the risk remains execution. Unlike shapewear, which relies on proprietary fabric compression technology, the beauty space is currently drowning in celebrity-backed ‘slop.’ The barrier to entry in cosmetics has never been lower, which means the cost of customer acquisition (CAC) is at an all-time high.
Financial Multiples and the Pivot
The numbers do not lie. Skims’ core growth in the ‘Fits Everybody’ line slowed to a projected 12% year-over-year in late 2025, down from the 80% explosive growth seen in its early years. To maintain its ‘unicorn’ status, the company needs the recurring revenue model that fragrance and skincare provide. While a bodysuit is a once-a-year purchase, a $48 serum is a monthly subscription in all but name. According to Yahoo Finance data from the last 48 hours, the consumer discretionary sector is punishing companies that lack ‘replenishment’ cycles.
The Cannibalization Risk
There is a structural danger in this expansion. By moving into beauty, Skims enters direct competition with Rhode (Hailey Bieber) and Rare Beauty (Selena Gomez), both of which have spent the last 24 months securing the very shelf space Skims now craves. N’Diaye’s background at Ami Colé suggests a ‘prestige’ positioning, but Skims’ mass-market logistics are built for volume. There is a high probability of brand dilution if the beauty line is sold through the same mid-tier channels as the shapewear. The overhead costs for specialized beauty warehousing and temperature-controlled logistics will likely compress Skims’ net margins by at least 400 basis points in the first four quarters.
Comparative Market Positioning
The following table breaks down the current valuation landscape for Skims versus its new beauty peers as of the November 2025 market open.
| Company | Primary Sector | 2025 Rev Multiple (Est) | Customer Acquisition Cost (CAC) |
|---|---|---|---|
| Skims (Current) | Apparel/Shapewear | 4.1x | Medium |
| L’Oréal | Beauty Conglomerate | 5.8x | Low (Scale) |
| Rare Beauty | Celebrity Beauty | 7.2x | High |
| Ami Colé (N’Diaye Origin) | Niche Beauty | 4.5x | Low (Loyalty) |
Operational Hurdles and Net Margins
Logistics are the silent killer. Skims has mastered the ‘drop’ model for clothing, where scarcity drives demand. Beauty operates on ‘availability.’ If a customer’s specific foundation shade is out of stock, they do not wait; they switch brands. The supply chain requirements for N’Diaye’s new division are exponentially more complex than stitching spandex. Investors should be wary of the ‘Complexity Tax’ that hits companies trying to bridge the gap between soft goods and chemical formulations. If Skims cannot leverage its existing 11 million-strong mailing list into immediate beauty conversions, the burn rate on this expansion could jeopardize their Q3 2026 IPO timeline.
Watch the January 2026 SEC Form S-1 filings. The true health of Skims Beauty will be hidden in the ‘Risk Factors’ section, specifically regarding inventory write-downs for unsold cosmetic stock. If the initial beauty launch is not bundled with core shapewear products by February, expect the valuation to face a significant correction toward traditional retail norms.
