UK retailer Boohoo bids on bankrupt Nasty Gal

Dive Brief:

U.K. retailer Boohoo has filed a certificate of incorporation of a private limited company for Nasty Gal, making a “stalking horse” bid for the bankrupt apparel retailer’s intellectual property and inventory, sources told the Business of Fashion.
After years of employee layoffs, accusations of workplace improprieties and despite an infusion of investment led by retail guru Ron Johnson last year, Nasty Gal filed for Chapter 11 bankruptcy Nov. 9.
Boohoo, a 10-year-old discount fashion retailer, earned $243 million in revenue last year with profits of $19.6 million, reflecting a 42% increase over 2015, according to Business of Fashion. Its U.K. sales rose 38% in that time, while continental European sales rose 25%, and the company is pursuing growth outside Europe, including pop-up shops in New York.

Dive Insight:

Nasty Gal, which garnered a vote of confidence in February 2015 in the form of a $16 million Series C funding round led by former Apple retail guru (and failed J.C. Penney CEO) Ron Johnson, has been marked from the start with the defiant and entrepreneurial spirit of its founder, Sophia Amoruso.

But the quirky, mostly online retailer has been beset by reports that it cheated employees of benefits like maternity leave, and received critical reviews for a collaboration with controversial singer Courtney Love. Nasty Gal has also failed to grow beyond its cult following of young, millennial women favoring its edgy apparel and sensibilities. Like many other e-commerce sites, the retailer has also struggled in the face of competition from fast-fashion brands, such as Forever 21 and Zara, which are nimble enough to react to new apparel trends.

Earlier this year Nasty Gal cut another 10% of its staff, which CEO Sheree Waterson characterized as “strategic restructuring," and by September, the retailer was reportedly looking for a buyer.

At a recent conference in Australia, Amoruso seemed resigned to the bankruptcy and hinted that she had other ideas for the future, calling Nasty Gal her “first business.” She also said she is confident that Nasty Gal will sell, noting that the brand is solid. "The brand is super super strong,” Amoruso said, according to The Huffington Post earlier this month. “If the company sells, which is probably what will happen in this process, there's a Netflix series that's going to be in 200 countries, marketing the s--- out of the Nasty Gal brand. So, somebody is going to be very lucky, and if they want me involved, I will be here and they can call me.”

Boohoo declined to comment on the news and Nasty Gal didn’t respond to a request for comment from Business of Fashion.