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Victoria’s Secret Invests in Supermodel-Approved Swimwear Startup

Victoria’s Secret put a big chunk of change into a swimwear startup with the Jenner and Hadid sisters’ seal of approval.

The intimates company on Friday announced an $18 million investment in Los Angeles-area bathing suit maker Frankies Bikinis, which counts Kylie and Kendall Jenner, Bella and Gigi Hadid, Hailey Bieber and Jennifer Lopez among its famous fans.

The move comes as Victoria’s Secret started selling swimwear again online in 2019 before bringing the category, which Euromonitor data says will reach $21.4 billion by 2025 on 33.8 percent growth from 2020, back to stores last year.

The minority stake gives a legacy brand like Victoria’s Secret greater insight into the entrepreneurial eyes of a founder locked into the trends that get young millennials and Gen Z consumers spending money. Then 17-year-old Francesca Aiello and her mother, Mimi Aiello, launched Frankies Bikinis in 2012 channeling a SoCal ethos and “laid-back Malibu vibe.”

Though the statement announcing the investment describes Frankies Bikinis as “inclusive,” it’s not exactly clear what that means to the company, which sells bikini tops and bottoms in sizes XS-XXL, or 0-14, when the average woman in America wears a size 16.

In the statement, the millennial founder said she has “such respect for the transformation that Victoria’s Secret has made over the past few years specifically with diversity and inclusivity,” referencing the company’s notable reinvention last year that replaced its usual stable of svelte supermodel ambassadors with female personalities known for their activism and accomplishments.

Francesca went on to say she believes her company and Victoria’s Secret “can continue to bring a new wave of fashion into the swimwear industry for all women of all shapes, all sizes, and all backgrounds.”

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The startup’s team will remain independent from Victoria’s Secret, which doesn’t expect the investment to change its first quarter 2022 outlook for a 4 percent to 8 percent sales decline.

In Victoria’s Secret’s Q1 earnings call, CEO Martin Waters indicated that the company had “a good first year” for the revived swim business. Upon the “very successful” swim return, Waters said the company has “set ourselves up nicely going into spring with clean assortments.”

Waters believes the Victoria’s Secret could raise prices in the swimwear category.

“Do we think that we could get higher prices by having superior merchandise and better fashion than our competitor base? Probably,” Waters said.

Victoria’s Secret sells third-party brands including Beach Riot, Bfyne, Vitamin A, Miraclesuit, Baobab, Roxy and Skinny Dippers on its website.

While Frankies Bikinis is most known for its swimwear, it considers itself a beach lifestyle brand, and has expanded into new apparel categories over the past year including ready-to-wear clothing, footwear and activewear. The company first launched a men’s swimwear collection in July last year.

The millennial entrepreneur told WWD in December that Frankies’ total sales have grown at a compound annual growth rate of 70 percent over the past five years. The company’s products are also carried at millennial- and Gen Z-friendly retailers including Revolve, Intermix, Free People, Kith and Browns.

But with Victoria’s Secret planning 100 new store openings over the next three years, including 15 new off-mall stores this year, Frankies Bikinis could get a new opportunity to expand its reach and gain new consumers.

“We are excited to be partnering with Francesca and the team at Frankies Bikinis,” Waters said in a statement. “She has created an aspirational beachwear brand and trend leader in the swimwear category, with room to grow and extend into new categories and attract new customers in the direct-to-consumer channel. Our investment in Frankies Bikinis is a continuation of our efforts to expand partnerships with culturally relevant brands founded by women entrepreneurs.”

Swimwear overall has attracted notable investments recently. Andie Swim raised $18.5 million in December with participation from Jay Z’s venture fund, helping the brand land on a list of emerging labels to watch.

Kegler Brown Hill & Ritter served as legal advisor for Victoria’s Secret. The Sage Group served as exclusive financial advisor to Frankies Bikinis and Ritholz Levy Fields served as legal advisor.

It’s unclear if the attention from Victoria’s Secret could bring new hiccups to the bikini brand solely based on its name. Frankie’s on the Park, a small Chicago boutique selling juniors’ fashion, brought a lawsuit after Francesca’s last year launched the Franki subrand and website specifically for tween girls. Their legal dispute is still ongoing and the Illinois shop on Tuesday asked the federal court for more time to respond to the national chain’s counterclaims.

Additional reporting by Jessica Binns.