One of Canada’s best-known e-commerce startups, Knix Wear Inc., is being acquired by Swedish hygiene products giant Essity in a $410-million deal that will take the Toronto-based company’s leakproof women’s underwear to global markets.
Essity announced in July that it will purchase an 80-per-cent stake in Knix, which also sells swimwear, bras and other apparel, for roughly 3.3-billion Swedish crowns ($410-million), a deal that values the Canadian company at roughly $500-milion. Knix founder and chief executive officer Joanna Griffiths will continue to own the remaining 20 per cent and will stay on as president.
Knix experienced significant growth throughout the pandemic as shoppers flocked to online shopping. Sales jumped to $75-million in 2020, up from $50-million in 2019. Knix’s sales rose further last year to $133.6-million.
Leakproof apparel, a product category that Toronto-based Knix helped to create, is the fastest-growing product segment within the “intimate hygiene” category, which includes feminine care and incontinence products, according to Essity.
The Swedish company forecasts that leakproof apparel will grow at an annual rate of more than 20 per cent over the next five years, excluding the Asian market. Knix currently sells its products mostly in the U.S. and Canada; the deal with Essity will take the brand global.
“As a fast growing, profitable brand, we were not actively looking to be acquired and ultimately this came down to finding the right partner,” Ms. Griffiths wrote in an e-mail to The Globe and Mail . “… As pioneers of the leakproof underwear category, a partnership with Essity marked the opportunity to become the global leader in the growing category and to reach more people with our products and brand.”
Essity makes other leakproof apparel under its brands Libresse, Bodyform, Saba and TOM Organic and sells incontinence products under the TENA brand. This week, Essity also acquired another leakproof apparel brand, Australian-based Modibodi.
“Part of Essity’s strategy is to be the fastest growing company in Intimate Hygiene – both organically and through acquisitions,” Essity CEO Magnus Groth wrote in response to questions from The Globe.
“Essity is already present in the fast-growing leakproof apparel product segment, but with a small market share compared to Knix. These acquisitions speed up Essity’s transformation to become the global leader in leakproof apparel.”
Knix will continue to operate as a standalone company, according to Essity.
Last year, Knix raised $53-million to fund its next phase of expansion, led by New York-based private-equity company TZP Group, and including some existing Knix investors such as Germany’s Acton Capital, as well as supermodel Ashley Graham.
At the time, Ms. Griffiths said that Knix planned to expand further into the United States, to open more brick-and-mortar stores, and launch more product categories. Knix is continuing to expand its store footprint, opening its seventh location in Calgary next year.
Knix has also been expanding its employee base, from roughly 125 people as of spring 2021 to approximately 200 employees currently. The company is planning to grow its employee count further, Ms. Griffiths said.
The company was founded in 2013, and started with a crowdfunding campaign to launch a line of leakproof underwear. It then went on to build customer loyalty by speaking openly about the reality of women’s bodies – including period leaks and incontinence – and launching products designed to fit a wide range of body types.
Bigger competitors eventually also jumped into the space, with brands including American Eagle Outfitters Inc.’s Aerie and Victoria’s Secret selling their own period underwear.
Knix expanded into other categories including bras, leggings, pyjamas, shapewear and swimsuits. It also launched maternity wear and products designed for postpartum bodies.
Essity is already a leader in disposable feminine-hygiene products, but there is growing demand for reusable products as well.
“For them it’s a commitment to a new area of business that Joanna will lead and build out. It’s a worldwide commitment for them to build out a strong business pillar of Essity in that space,” said Hannes Blum, a Knix board member and veteran e-commerce entrepreneur based in Victoria, who is also a partner with Germany’s Acton Capital, which initially invested in Knix in 2019.
The deal with Essity came together after more than a year of discussions.
“What dragged it out was none of the shareholders was willing to sell that if it wasn’t a premium valuation,” Mr. Blum said. “The business had enough cash, it was growing – 100 per cent last year. We didn’t see a slowdown postpandemic as many other e-commerce players saw, and the brand loyalty, retention metrics were extremely strong.”
Essity said it expects to close the acquisition in the second half of this year.
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