Nasty Gal, Inc. anticipates that online U.K. apparel retailer Boohoo will become the new owner of its trademarks and other intellectual property.
Boohoo prevails because no other entity came forward to best its stalking horse bid of $20 million for Nasty Gal's assets; competing bids were due Feb. 2, but a scheduled auction has been canceled as none were submitted.
The Nasty Gal sale is expected to receive final approval from the U.S. Bankruptcy Court for the Central District of California on Feb. 8, and to close on Feb. 28.
Nasty Gal has been marked from the start with the defiant and entrepreneurial spirit of its founder, Sophia Amoruso. As recounted in her book "Girlboss," Amoruso got her retail start in her early 20s, selling vintage fashions and other finds — sometimes purchased, sometimes shoplifted — on eBay, and turned that into a respectable e-commerce enterprise. But in January 2015 Amoruso stepped down as CEO in an effort to bring the business to a new level of maturity, handing the reins to retail veteran Sheree Waterson, who previously served as president.
Nasty Gal continued to struggle, however, beset by reports that it cheated employees of benefits like maternity leave, and by critical reviews for a collaboration with controversial singer Courtney Love. The retailer failed to grow beyond its cult following among young millennial women favoring its edgy apparel and sensibilities, and, like many other e-commerce sites, it struggled in the face of competition from fast-fashion brands like Forever 21 and Zara, which are nimble enough to react to new apparel trends and quickly change up their merchandise.
By early last year, Nasty Gal cut another 10% of its staff, which Waterson characterized at the time as “strategic restructuring.” But by late summer, the retailer was reportedly looking for a buyer. That’s where Boohoo is enthusiastically willing to step in, embracing the Nasty Gal brand's appeal to young shoppers as a plus for its own ambitions.
Nasty Gal delivered net revenue of $77.1 million in the year ended Feb. 1, 2016, including revenue from vintage clothing and third-party brands, which are excluded from the proposed transaction, according to a press release. Nasty Gal’s after-tax net loss in that period was $21 million after taking into consideration operating costs. (Boohoo bid only on Nasty Gal’s intellectual property assets, and not its operating costs.) Waterson said Monday the transaction is a good fit that will keep the Nasty Gal brand alive, adding she is "enormously proud of the tremendous brand value we have built over the years."