Boohoo confirmed on 28 December that it has agreed to buy certain IP assets from Nasty Gal for $20m (£16.2m). Drapers takes a closer look at the US retailer.
The story of Nasty Gal and its entrepreneurial founder Sophia Amoruso has become something of a retail fairy tale.
Amoruso started what would become a multimillion dollar business with just a laptop and an eBay account in Los Angeles in 2006, aged 22. She launched it as a vintage eBay shop, but Nasty Gal soon grew into a international retailer selling its own products alongside a mix of brands, including Glamorous, Levi’s, Jaded London and Lavish Alice.
The etailer has raised $65m (£53m) in its 10-year history, including a $9m (£5.7m) investment from Index Ventures, the fund manager that focuses on emerging fashion etailers in 2012. At the time, Amoruso said the deal would allow Nasty Gal to use Index’s expertise to improve its international logistics.
In May 2014, Amoruso published business handbook and memoir #GirlBoss about starting Nasty Gal from scratch, which went on to spend 20 weeks on the New York Times’ bestsellers list. A #GirlBoss podcast followed, which is set to be joined by a conference and TV series this year.
Former Lululemon chief product officer Sheree Waterson took over as chief executive officer in 2015, leaving Amoruso free to concentrate on her role as “brand connector” to “the world at large, to influential individuals and organisations and our customer”.
But despite Nasty Gal’s initial success and the considerable marketing hype around Amoruso, it has been far from smooth sailing. There have been several restructurings, including redundancies in 2014 and early 2016, and it has also faced accusations of a “toxic” culture for its employees, something the business has strongly denied.
Nasty Gal made a loss of $21m (£17m) in the year to 1 February 2016 and filed for Chapter 11 bankruptcy protection in November last year.
Waterson issued a statement arguing that Nasty Gal could bounce back. She argued that the business would “emerge stronger and even better”, as the bankruptcy protection would be used to address liquidity issues, restructure itsbalance sheet, and correct structural issues, including reducing its high occupancy costs. The business was later thrown a lifeline in the form of a $20m (£16m) loan to help it continue operating until a decision is made on its bankruptcy.
The sale to Boohoo is not a done deal – a 30-day bidding process is now underway, and Boohoo could be gazumped. But if its bid succeeds, it could be the beginning of a beautiful friendship.
Boohoo founders Mahmud Kamani and Carol Kane have described Nasty Gal as a “well established, global brand”, which would complement its existing brand and accelerate the group’s international expansion, particularly in the US.
Nasty Gal’s trend-led product is undoubtedly a good fit with Boohoo, although the young fashion market is increasingly saturated and Nasty Gal’s higher price point (own brand dresses on its UK website retail from £27 for a jersey maxi dress to £206 for a sequinned dress from a collaboration with singer Courtney Love) could be a challenge.
But if anyone knows how to run a successful ecommerce business that appeals to a millennial customer base, it’s Kamani and Kane.