From eBay Vendor to Millionaire to Bankruptcy: Nasty Gal’s Tumultuous Story


Whether you like her or not, Sophia Amoruso has risen to fame in the fashion industry for both her style and attitude. Nasty Gal, an apparel brand known for its edgy ready-to-wear designs, was founded by Amoruso in “her ex-boyfriend’s apartment back in 2006 with a laptop, an eBay account, and a passion for hoarding vintage.” She worked to build her brand from the ground up, including securing a Series C funding round of a whopping $16 million back in February of 2015. It’s a real rags to riches story… one you can read about in her acclaimed book #GIRLBOSS, which spent 20 weeks on the New York Times Best Sellers list. For a while, it seemed like everything she touched turned to gold.



But as her business continued to mature and it became clear the brand needed an experienced leader – Nasty Gal had exceeded $100 million of sales in 2012, and then had to promptly lay off 10 percent of its staff two years later when sales levelled out – Sophia decided to step down as CEO. “As you know, part of being a #GIRLBOSS (and just a decent human being) is about playing to your strengths. I’ve been wondering for a while now if the CEO role is one that I want – and the one that I’m best at,” she writes in the announcement blog post in early 2015.

It’s a pretty common theme in rapidly-growing startups like Nasty Gal. A young entrepreneur has a great idea, it catches on, and they suddenly find themselves the ill-equipped head of huge companies. In many analyst’s opinions, stepping down is the best thing you can do for your company.

But things were never quite the same after Amoruso left. Shortly after she stepped down, a lawsuit was filed against the brand claiming they illegally fired three pregnant employees.

Although Nasty Gal claims the layoffs were part of a larger company restructure, the lawsuit proved to be a big PR fumble for the company who publicly prides themselves on being inclusive and encouraging to women in the workplace.

And then in November of 2016, word hit the industry rumor mill that the company will file for Chapter 11 bankruptcy protection, which would help to further restructure the company under lawful supervision. It’s an option available to companies who are unable to service its debt or pay its creditors.

“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,” states Sheree Waterson, the new CEO of Nasty Gal.

 “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.”

It wasn’t long before, a competitor in the apparel e-tail space, let media know they’re interested in acquiring Nasty Gal and were awaiting approval from the US Bankruptcy Court overseeing the changes. “Should we be successful in acquiring Nasty Gal it would represent a fantastic opportunity to add such a well-established, global brand to the Boohoo family,” says Boohoo co-chief executives Mahmud Kamani and Carol Lane.

So what happens now?

There’s still a lot of red tape to be navigated: there will now be a court-approved bidding process, which is set to close on February 2nd. And if no better offers roll in (which if they did, would be a big surprise to the industry), the court will need to approve the transaction by February 8th.

In an update to their investors, Nasty Gal writes, “The Board believes the proposed transaction has the potential to accelerate the Group’s international growth, particularly in the US, building on Boohoo’s existing customer reach and product range across the globe.”

This isn’t the end for Nasty Gal – at least not yet. Their brand story proves that a business has a heartbeat of its own; they’re a living, breathing entity and go through life cycles just like people. It also goes to show that some are just as resilient as we all wish to be.