Nasty Gal Petitions to File for Chapter 11
Los Angeles e-tailer Nasty Gal Inc. has petitioned a court to file for bankruptcy.
The filing Wednesday in bankruptcy court for the Central District of California cites an Oct. 24 board meeting during which time it was determined the company would seek Chapter 11 protection. The news comes on the company’s 10th year in operation.
“Our decision to initiate a court-supervised restructuring will enable us to address our immediate liquidity issues, restructure our balance sheet and correct structural issues including reducing our high occupancy costs and restoring compliance with our debt covenants,” said Nasty Gal chief executive officer Sheree Waterson. “We expect to maintain our high level of customer service and emerge stronger and even better able to deliver the product and experience that our customers expect and that we take pride in bringing to market.”
The company said it has been looking at strategic partnerships with other brands and will continue with that process through the bankruptcy restructuring.
A read on the business more recently has been difficult to come by. WWD last reported revenue of about $130 million in 2014 but a report from Forbes put the business last year at more than $300 million.
The company, in February 2015, brought on Ron Johnson, who led a $16 million Series C. The round brought the company’s total raised to date to $65 million and gave Johnson a seat on the board. The former Apple and J.C. Penney Co. Inc. executive was expected to help lend his retail expertise to the company’s brick-and-mortar business.
In late 2014, Nasty Gal entered the physical retail landscape with a store on Melrose Avenue and followed that up with the March 2015 opening of a Santa Monica door. However, there’s been little clarity on just how successful the doors have been for the business, with executives telling WWD at multiple points in time throughout the past year that they were still learning from the two stores before determining next steps for the brand.
Nasty Gal, which founder Sophia Amoruso started as an eBay store, rose quickly to success with its brand of vintage and vintage-inspired looks along with a sometimes cheeky attitude. Its voice served it well among a new generation of consumers, reared on social media and craving authenticity well before advertisers ever began using the word in marketing plans.
The company in early 2015 named Waterson, a former Lululemon executive, to head the business as ceo. She succeeded Amoruso, who stayed on as executive chairman, charged with overseeing the company’s creative.
But the brand’s growth appeared to have stalled in more recent years. WWD reported in September the company was “aggressively looking for capital” and possibly a new owner, with e-tailer Revolve Clothing rumored to be in the mix.
United Parcel Services Inc. is the company’s largest unsecured creditor with a claim of $576,950. There’s also Los Angeles apparel firm Olivaeous, which is owed $318,816 along with B&B Footwear of Los Angeles with a claim of $293,653 and $289,332 from the property owner of the company’s headquarters in downtown L.A.
Nasty Gal’s filing is the latest example of a move high-flying e-tailer hitting the wall. It follows the fire sale of Gilt Groupe to Hudson’s Bay Co. and Bed Bath & Beyond’s purchase of One Kings Lane for a price deemed “not material.”
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