Hi, and welcome back to Line Sheet. By the time you read this, I may be lingering by the pool at the Chateau Marmont. (Gucci is hosting a party there tonight.) See you there? Say hi.

🚨🚨 Programming note: Legendary stylist Paul Cavaco joins me on Friday’s episode of Fashion People to discuss his new podcast, Under the Cover. (Cindy Crawford is the first guest. Listen.) We worked through a lot: his early days styling for Esquire and Bruce Weber; the inception of KCD—you probably know, but if you didn’t, it stands for Keeble, Cavaco, and Duka—all those legendary Harper’s Bazaar covers with Fabien Baron and Liz Tilberis; his 16-year run with Linda Wells at Allure; moving to Los Angeles; how the industry has changed; how he kept his sanity. Emotions are expressed! This has been my favorite interview by far since we launched the pod, so I hope you like it, too. Subscribe to Fashion People here.

Will the news ever stop? (Come on, it’s summer, guys.) I guess not. I’ve got some updates from Europe, plus the latest on the business of GLP-1s, and of course, a report following the Condé Nast board meeting. And finally, I do a quick check-in on Skims and the wider Kardashian–Grede portfolio. Are they going to get their big exit after all?

Mentioned in this issue: Skims, the Kardashians, Jens and Emma Grede, Peter Hawkings, a GLP-1s update, enjoying the taste of food, Sarah Burton, J.D. Vance, Bernard Arnault, Kim Jones, Chanel, Condé Nast, Roger Lynch, Victoria’s Secret, Frame, Good American, Josh Kushner, Frédéric Arnault, EssilorLuxottica, Meta, Laurence Goldberg, and more.

• Tom Ford, the brand, is taking a beat at Fashion Week: I hear Peter Hawkings will not be showing in Milan in September. No idea why. (Do you? Call me! +1 646-241-3902.) Frees up stylist Marie Chaix for another gig… (A Tom Ford rep did not comment.)
• “Ozempic” now trumps “Keto” in Google searches: Other findings in The New Consumer’s 2024 mid-year report: People on GLP-1s are hungry again (maintenance phase), say the taste of food matters, and are interested in foods created just for them. The thing holding people back from getting the shot? The idea of being on medication forever, and also weird side effects (we know too much about those at this point).

  Perhaps the most important thing to note is that the price of GLP-1s will continue to drop, and they’ll also become more readily available—after all, the demand is there. About 26 percent of Americans not yet prescribed GLP-1s want to take them, according to The New Consumer’s survey. I guess the drugmakers will probably have to start coming up with drugs to treat the side effects, or at least better drugs with fewer side effects. The report also breaks down the unbundling of beauty (important for those of you watching Estée Lauder) and gets into the Zyn phenomenon.

  I still don’t really understand what Zyn is and don’t care to, but if you do, there you go. Also, this report was created by my husband, The New Consumer founder Dan Frommer, but please don’t hold that against him. (Also, please don’t blame him for looking like J.D. Vance at certain angles, which pretty much everyone in the world has pointed out to him this week. I prefer the Jimmy Kimmel comparison.)

• The latest wild theories and sensible arguments in the never-ending carousel of designer appointments: Sarah Burton for Chanel? I am still bullish on Burton at Givenchy, but this is the latest rumor spreading around Paris. On Fendi, I hear that Kim Jones may be signed for another year, but it’s ultimately up to Bernard Arnault. Jones will be showing in September, though, it seems.
• No peace for Condé Nast in the Middle East?: In last week’s legacy publishing update, I noted that Condé is being sued by Nervora, its regional partner of 12 years, for essentially wanting to break up. A few things to flag: I referred to the partnership as a joint venture, but it’s a licensing agreement. Also, while folks on the Condé side are confident that this dispute will be sorted outside of court, those in Nervora’s world aren’t so sure, and reminded me that if this does indeed go into arbitration at the International Chamber of Commerce, where Nervora filed a complaint about three weeks ago, it could drag on for many months, even years. There is obviously more to the story and I will keep on it.
• The realities of the current climate: I wonder if the Nervora situation even came up at the Condé Nast board meeting, on Wednesday, given that there was so much ground to cover. First off, William Bowes, the company’s general counsel, just resigned. His departure follows the resignation of chief diversity officer Yashica Olden and, of course, chief revenue officer Pam Drucker Mann. (The current Pam discourse is slightly all over the place: She hasn’t been replaced, she is supposed to leave in early August, and there are internal candidates who still have their hopes up to replace her—even if it feels nearly inevitable that C.E.O Roger Lynch will pick an outsider. We’ll see…)

  Then there’s the executive comp piece of it all. Like many privately held conglomerates, Condé Nast’s top top executives are offered a synthetic derivative known as an “LTIP,” or long-term incentive plan, that basically functions as a stock position in a private concern that will not change control. Theoretically, LTIPs are intended to pay out an annual bonus, almost like a dividend. It’s often described as phantom equity. Anyway, these LTIPs can be benchmarked against whatever ownership prefers. And at Condé Nast, I’m told, they are tied to the company’s valuation, which is evaluated annually. Condé Nast’s value has decreased by 23 percent over the past year, according to a source with direct knowledge of the report. Because of the diminished value, many high-level employees will be receiving roughly half of the original award, issued in 2021. (The conclusion among executives is that the company’s value has roughly halved since 2021, when an independent arbiter began conducting valuations.)

  Why such a disappointing outcome, especially since the company publicly stated earlier this year that its revenue had stabilized around $2 billion, albeit with a leaner operation? I’ve talked to people across different Condé camps about this drop in valuation. The big thing to remember is that valuations of comparable companies have decreased a ton over this period, so the percentage drop is probably not so crazy in relative terms—although, it is a lot, and The New York Times Co.’s valuation on the NYSE is actually much higher than it was five years ago. (Public company, different biz, sure, but also a legacy media product that required significant transformation to survive, etcetera.) A rep for Condé Nast said that, “Over the last three years, the company’s valuation has tracked in line with valuation trends across media and entertainment sectors.”

  The frustration among certain parties, as I’ve reported before, is that Lynch’s hard-nosed approach to the paywall at properties like Vogue and GQ—any mag that’s aggregating, really—has meant sacrificing meaningful advertising revenue, and is a big reason there have been so many rounds of layoffs. Lynch could argue that forcing the paywall behavior, aided by lots of testing, would be better for the brands in the long run—and look, maybe he’s right—but that’s hard for employees to stomach while they receive disappointing payouts and marching orders to further reduce headcount.

  Lynch’s own compensation may also be impacted. I’m told that his contract, speculated to be fixed-term but is actually rolling, indicates payouts at three, five, and eight years if he hits certain milestones. This is year five. A rep for Lynch did not respond to a request for comment.

In the grand scheme of things, of course, it doesn’t really matter if Khy is a success. The Kardashians are already wildly wealthy serial entrepreneurs who think like venture capitalists—dispassionately prioritizing moonshot level outcomes over lesser businesses that struggle to find product-market fit. Often working with Jens and Emma Grede, the couple whose Popular Culture entity holds several of the family’s brands, the Kardashians are constantly creating new companies in search of scaled outcomes. No one will go hungry if Sprinter, Kylie’s canned vodka soda, never takes off. Or if denim label Good American, the family’s first real collaboration with the Gredes, sells at a premium or doesn’t. Or even if Kim Kardashian’s private equity firm, SKKY Partners, which she recently founded with ex-Carlyle consumer lead Jay Sammons, never raises that $1 billion-$2 billion fund they had announced. They raise money, start stuff, and if it doesn’t work, they move on to something else.

But Skims is another story. The shapewear turned lingerie turned lifestyle brand has, in just five years, managed to become an insurgent in a category (bras) that hasn’t been disrupted since the 1980s. Posting $750 million in sales in 2023, with a strong net profit of $190 million, Skims is still a fraction of the size of Victoria’s Secret, which generated more than $6 billion in annual revenue that same year. But Victoria’s Secret, which has failed to reestablish itself as a category leader, relies on unsustainably high revenue—no retailer can distribute that much product in an increasingly fractured market long-term. As I noted in my new book, Selling Sexy: Victoria’s Secret and the Unraveling of an American Icon (out October 8), Skims has already eclipsed Victoria’s Secret in mindshare.

Skims, which raised $270 million at a $4 billion valuation in 2023, promises a substantial return for the Gredes and Kardashians, alike. It also would be a big winner for early investors who participated in the company’s $25 million pre-money round. Larger institutional investors have joined subsequent rounds, including Josh Kushner’s Thrive Capital, which invested at a billion-dollar valuation, and Daniel Sundheim’s D1 Capital Partners. Participants in the most recent round, in particular, are looking for an eventual I.P.O. to realize a significant return on their money.

The problem with the venture approach, of course, isn’t simply that the structure incentivizes investors to manage for grand slams over singles. The bigger issue is managing the capital stack—later-round investors add a layer to the pile, almost certainly with the expectation of reaping their rewards first and swiftly and significantly. In order to justify its valuation and ensure the exit that they’re all looking for, Skims will need to get a lot bigger—and take risks that no Kardashian brand has taken before.

Frame, the denim label Jens Grede founded with his business partner in Saturday, Erik Torstensson, is profitable and healthy, but hasn’t found an exit. Good American, the denim brand Emma Grede founded with Khloé Kardashian in 2016, explored a sale a couple of years ago, but nothing materialized. (Two sources indicate that direct retail year-over-year sales are down more than 10 percent since March, although a source close to the company said that was, at least in part, due to a replatforming and logistics change, and that the business is growing overall, both at physical retail and through wholesale.) Safely, the cleaning products line they founded with Kris Jenner, has increased distribution. Does that mean it’s doing well? Definitely better than it was last year.

But the Skims exit strategy is under pressure from all sides. The best-laid plan for an I.P.O. roadshow in 2024—touting a healthy profit and steady growth—may be delayed by the fear of volatility in the retail sector as the election approaches. (I’ve heard from people close to the company that an I.P.O. is more likely in 2025, although not everyone agrees that Skims should wait.) The company also needs to establish many more brick-and-mortar stores if it’s going to continue growing.

Stores are coming, but slowly. In June, the brand opened its first permanent outpost in Georgetown, with New York and Los Angeles flagships to follow, plus a store in Miami. Retail requires an incredible amount of money, and the number of yearly openings would be accelerated by a public float. Again, the concepts also need to be productive—profitable in store, yes, but they should also aid in boosting online sales in the region.

Kardashian owns 30 percent of the Skims business, but she also earns a royalty on sales (5 percent) as long as the company remains private. So the company needs to go public or sell at a premium in order to make it worth her while, though directors and investors will have a say in the matter, too. At this point, it’s highly unlikely that Skims would be acquired by another company—it’s far too expensive—although I wonder if some sort of merger with Victoria’s Secret is possible. That company, with its current measly market cap of $1.8 billion—less than one-third of its annual revenue—has all the real estate Skims could ever need and more (800-plus stores). Repositioning that brand would be the ultimate challenge for the ambitious Grede duo.

Could Skims and Victoria’s Secret coexist? My feeling is that they sell the same thing, with Skims edging Victoria’s Secret out on product, and creaming them on marketing. But the truth of the matter is that the last production innovation in this category was Spanx. With lingerie, you’re really buying into the idea of what kind of person you want to be—and, more practically, what product kind-of fits your body. Anyway, it’s an unrealistic outcome at a $4 billion valuation, but something to think about.

More realistic is that the Gredes, who have done so much right thus far, will be tasked with solving the various challenges posed by scale and expectation—leaning on Kardashian in the marketing, but also making it bigger than her. They’ve hired talent to scale the vision, and at least some of the early stakeholders have already made back their money and then some. Will they get their unicorn exit? Mostly everything is still working in their favor… except for time.

It is not going well in China for luxury, but Japan is popping. [Reuters]

After making a pair of smart Ray-Bans, Meta is in talks to take a stake in its parent company, EssilorLuxottica. I guess we gotta talk about wearables soon? [Financial Times]

A very chic and interesting-seeming new magazine has launched, with contributors including Naomi Campbell, Ian McEwan, Eileen Myles, and Yohji Yamamoto. Donatien Grau, who runs Contemporary Programmes at the Louvre, and Thomas Lenthal, co-founder of System, are behind it. [Alphabet]

I’m not going to wade too far into the Fashion Substacks Are Getting Annoying discourse—remember that most people still have never heard of Substack—but I do think it’s worth reading Leandra Medine Cohen’s interrogation of the matter in her own newsletter. Cohen is the de facto editor-in-chief of the lot, and makes some sharp observations. Also, I really enjoyed her explanation of how we got to mesh flats and $800 jellies. A great read. [The Cereal Aisle]

Jelly belly! [Twitter]

Absolutely love this redesign, wish there was a place to buy print magazines. [Rolling Stone]

Truer words have never… [Annie Armstrong’s Twitter]

Why guys are dressing more “queer” than ever. (They said it, not me.) [Financial Times]

Before she opened PR Consulting Los Angeles or flacked for Balenciaga, Laurence Goldberg was a celebrity stylist. After breaking from P.R., she has launched a personal styling service that a lot of people out here in Hollywood are talking about. [Try It]

So glad Delia is back on her B.S. [Deez Links]

Until Monday,
Lauren