The news: Kim Kardashian-founded apparel brand Skims is now valued at $5 billion following a $225 million funding round, per The New York Times.

The company plans to use the funds to open stores in international markets, extend its intimates and shapewear lines, and expand into other categories.

Zoom in: Skims is on track to generate more than $1 billion in revenues this year, as its strategy of opening stores in high-end, high traffic areas and capturing attention with products that are designed to go viral boost awareness and drive sales.

• Its partnership with Nike is another significant growth lever, giving the brand credibility, expanded manufacturing capabilities, and access to an even larger audience.
• The company has ambitions beyond apparel: It repurchased Kardashian’s former beauty business from Coty with the aim of relaunching it under the Skims banner, and recently named Ami Colé founder Diarrha N’Diaye as executive vice president of beauty and fragrance.

The big picture: The latest fundraising round cements Skims’ status as the buzziest brand in undergarments. The company is now valued at nearly twice as much as Victoria’s Secret, despite having less than one-sixth of its revenues.

• While Victoria’s Secret has struggled to find a middle ground between sex appeal and comfort, Skims has managed to do both—earning strong customer loyalty in the process.
• The company’s focus on profitable growth has helped it avoid the troubles of other inclusive underwear brands like Parade, which recently folded after six years of operation.

Our take: Skims has several advantages over its competition, including ample free publicity from its famous founder. Yet, given how many celebrity-backed brands fail to gain traction, Skims’ success points to the strength of its product strategy, marketing, and brand position.

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