Nasty Gal Files for Bankruptcy

Amid all the post-election hullabaloo and protests on Wednesday evening, online retailer Nasty Gal quietly announced its was filing for Chapter 11 bankruptcy protection. 

From WWD:

"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 Sheree Waterson, Nasty Gal chief executive officer, in a statement. "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."

Famous for its "cool girl" aesthetic, Nasty Gal was founded in 2006 by Sophia Amoruso as an eBay shop for vintage clothing. It was lauded as one of the fasted growing and successful e-comm start-ups, heralded by the girl power-wielding image of Amoruso. The brand's vintage-inspired styles with modern silhouettes, paired with sassy marketing that thrived on social media, did well with a new generation that was attracted to real, raw attitude. 

 In 2014, the brand launched two brick-and-mortar stores and Amoruso became a New York Times best-selling author for her book Girl Boss -- part memoir, part entertaining how-to guide influenced by her unconventional experience becoming a business leader.

However, press caught wind of not-so-kosher goings-on in the company when former employees sued for wrongful termination. Four women claim they were fired, because they became pregnant, and a new suit has surfaced where a woman was fired for undergoing a heart transplant. Claims of a toxic working environment, discrimination, design knockoffs, and staff lay-offs across the board did not make the brand the girl power darling it once was. 

In 2015, Amoruso stepped down as CEO, and it's said that she will shortly step down as executive chairwoman. While she will probably say goodbye to her own company, Amoruso is still doing extremely well. Last month her second book Nasty Galaxy was released, and in June she made Forbes's list of America's Richest Self-Made Women, landing the second-youngest slot on the list right after Taylor Swift. She's 32 years old with an estimated net worth of $280 million -- that doesn't sound so horrible. Her next project involves partnering with Netflix  (NFLX) on the comedy series #Girlboss, a TV adaptation of Amoruso's rise to fame and wealth.

"United Parcel Services Inc. is the company's largest unsecured creditor with a claim of $576,950," according to WWD. "There's also Los Angeles apparel firm Olivaceous, 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."

A combination of bad press and more socially driven brands with similar aesthetics like Reformation or cheaper, similar products like at Urban Outfitters popping up most likely dealt the harsh blow. Women don't want to shop at places that are known for employee belittlement, and while Nasty Gal's marketing strategy was certainly original a few years ago, other brands have picked up on the company's success and adopted a similar attitude.

Nasty Gal is certainly down but not out. In the coming months, it wouldn't be surprising if more self-proclaimed Nasty Women made a resurgence to continue the momentum of Hillary Clinton's bid for the presidency, and the brand should capitalize on that sentiment. On the bright side, time to get holiday-ready rompers and gifts on the cheap. 


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