Nasty Gal founder Sophia Amoruso’s personal brand continues to soar, but her clothing brand is not so lucky.
Following turbulent financials, a number of staff layoffs and lawsuits by former employees in recent years, Nasty Gal is preparing to file for bankruptcy in order to restructure the company.
The brand announced on Wednesday that it’s in the process of initiating a court-supervised restructuring.
“[Bankruptcy] will enable us to address our immediate liquidity issues, restructure our balance sheet and correct structural issues,” CEO Sheree Waterson said in a statement, adding that the issues include reducing high-occupancy costs and needing to bring debt into line with creditors. Waterson said the business will continue to operate as normal throughout the process, and it will try to enter new strategic partnerships, including with other brands.
Amoruso, who stepped down as CEO last year but remained executive chairwoman, is expected to step down from that role. Director Danny Rimer is also expected to resign from the board, according to Recode.
Amoruso’s personal brand has gone from strong to stronger (worth $280 million, she was named #53 on Forbes’ list of America’s Richest Self-Made Women this year), but the edgy, free-spirited Nasty Gal brand, which grew rapidly in its early years, has experienced a number of growing pains, which have led it to bankruptcy.
Glossy breaks down Nasty Gal’s business timeline.
2006: 22-year-old Sophia Amoruso launched Nasty Gal Vintage on eBay, selling vintage clothing on the e-commerce platform.
2008: Nasty Gal launched as a standalone e-commerce store, nastygal.com.
2010: Nasty Gal moved its headquarters to Los Angeles, and its revenue hit $10 million.
2011: Nasty Gal’s revenue reached $22.9 million, according to Inc. It grew a cult-like following with customers ages 18 to 24.
2012: Venture capital firm Index Ventures invested $40 million into Nasty Gal, after an initial $9 million.
Nasty Gal launched its own label consisting of limited-edition designs, which accounted for 35 percent of its sales, Amoruso told Recode. The company had 110 employees.
Late 2012: Sarah Wilkonson of ASOS joined Nast Gal as the vice president of design.
August 2013: Nasty Gal launched its first footwear collection, Shoe Cult by Nasty Gal.
May 2014: Amoruso released her memoir book, “GirlBoss,” focused on her journey launching and building Nasty Gal.
September 2014: Nasty Gal laid off 10 percent, or between 20 and 27, of its employees—reportedly tech and PR staff—while preparing to open its first brick-and-mortar store in LA, in November. The layoffs were made as Nasty Gal was undergoing organizational restructure, although the company had reportedly just made several high-level employee hires, according to Tech Crunch. “Business is down dramatically and leadership has been in panic mode for months,” an employee told the online news site.
January 2015: Amoruso stepped down as CEO, but stayed on as executive chairwoman. Nasty Gal’s president and chief product officer Sheree Waterson, who joined the company in 2014, was named CEO. The move was expected to take Nasty Gal’s growth to a greater level, with Waterson offering the brand far more experience in leadership and operational expertise, Amoruso told Recode. Prior to Nasty Gal, Waterson had worked for Lululemon and Levi’s.
February 2015: Former head of retail at Apple Ron Johnson invested $16 million in Nasty Gal.
March 2015: Nasty Gal opened its second brick and mortar location, a 6,500-square-foot store in Santa Monica. Racked reported that Nasty Gal’s revenue had stalled around the $100 million mark for the past three years. Former employees started taking to the job and recruiting site Glassdoor to vent about the company’s culture. An anonymous employee who worked for the company for a year wrote, “I reported to five different people, watched over 30 people get laid off, and saw over 15 people quit in my department alone.” Others described feeling, “used and abused” by Nasty Gal.
During 2015: The retailer faced two lawsuits: The first claimed that the company illegally terminated three pregnant employees, plus one male as he was about to take paternity leave. The second was filed by a former employee who claimed she was fired after a heart transplant, according to the Fashion Law.
February 2016: The brand laid off 19 people, or 10 percent of its employees. CEO Waterson described it as “strategic restructuring.” A source at Nasty Gal told Glossy that the cuts included senior buyers, as well as some staff members in creative and tech positions.
June 2016: Worth $280 million, Amoruso was named #53 on Forbes’ America’s Richest Self-Made Women list.
October 2016: Amoruso released “Nasty Galaxy,” her second book. Within three weeks, the book became a number-one best seller on Amazon. The 272-page coffee-table-style book ($22) features short stories and quotes from Amoruso and other women who fit the “Girlboss” persona, as well as illustrations.
November 9, 2016: Nasty Gal announced that it had filed for bankruptcy. In a statement, the company said that it’s exploring strategic partnerships with other strong brands.
Image via Nasty Gal.