If you’re wondering how a multi-million dollar company like Nasty Gal went bankrupt, you’re not alone. It seems like not so long ago when Sophia Amoruso just came out with her book #GIRLBOSS and was preaching about how you can create your own opportunities and take control. Her rags-to-riches story was so inspiring and motivating and the growth of her company Nasty Gal was so phenomenal. The products featured on her site were affordable but also refreshing and different from all the orthodox styles out there. Nasty Gal hit a very specific demographic of 18-24 year old girls who identified as being edgy, daring and glamorous. Although I don’t consider myself to be super daring in terms of the way I dress, I still purchased my fair share of “nasty” outfits! (With this bodysuit pictured below being one of the items – outfit details further down below!)

So let’s take a look at this timeline of the growth and decline of Nasty Gal throughout the last 11 years.

A TIMELINE: THE GROWTH & DECLINE OF NASTY GAL

Oh my. Just recounting that whole timeline was tumultuous. So how did such a rapidly growing (doh, that’s usually why), wildly successful company suddenly file for bankruptcy?

(The following are my own opinions as I attempt to answer how Nasty Gal went bankrupt)

HOW NASTY GAL WENT BANKRUPT

RAPID EXPANSION + BRICK-AND-MORTAR COSTS

I admit Nasty Gal’s growth rate from 2008 to 2012 was astounding. But it isn’t necessarily sustainable. Sophia’s unique taste paired with well-targeted online marketing produced amazing results in sales ($100 million revenue in 2012). But in 2014 and 15 revenue started to drop whilst expenses continued to grow.

Nasty Gal established two brick-and-mortar stores which add up to a total of 10,000 square footage within a year. Imagine how much the rent is per month! Going from an online-only business model to also including brick-and-mortar is extremely risky and high cost. Young millennial customers (Nasty Gal’s main target market) are probably used to online shopping by this point and are less motivated to go shopping in person. Personally, if the shipping and return is free, I’d rather browse and purchase online, try it on at home and return whatever I don’t need. I simply don’t go out to shop anymore!

You can read more here about how over funding and over expansion killed Nasty Gal.

PRODUCTS LACKING IN QUALITY

Let’s face it. Nasty Gal isn’t exactly know for it’s amazing product quality. This is an issue I have experienced first hand. Some tops or dresses might look amazing on a 5’9″ skinny model but look rather abysmal when it arrives in my mail box. I also had experiences where the clothes simply weren’t designed well (possibly in the pattern making department) and would fit very weirdly. This is also another reason why brick-and-mortar stores aren’t the best idea. I doubt spending a huge sum on rent and staff per month to let customers try on low quality products will help your sales much, no matter how much interaction you’re getting out of it. (Besides, many people like to shop undisturbed, especially the ones who are already buying their products online)

PRICE/PRODUCT RANGE

While the #nastygal aesthetics was always very clear, the price range of the products sold on its website wasn’t always within a reasonable range for their target customers. Would Miss Nasty, who is used to buying low to medium quality polyester skin-tight party dresses that cost $50 on Nasty Gal, then go on to purchase a Chanel vintage bag that costs thousands of dollars? Possibly not. Even if I personally would, I wouldn’t buy the Chanel bag on nastygal.com. Furthermore, amongst the products Nasty Gal used carry (brands like The Jetset Diaries and Kat Maconie), some were $300-500 – a price range that is significantly higher than what their usual customer is accustomed to. This forces Nasty Gal to later place these high priced items on sale, resulting in less profit.

INTERNAL MANAGERIAL PROBLEMS

Taking a quick look at Nasty Gal’s Glassdoor reviews from anonymous employees will give you a good idea how the company is failing from a managerial perspective. Employees have generally cited unskilled leadership, poor top-down communication, over work and lack of organization. Here are a few comments quoted from the Glassdoor website:

“They do not care about lower level employees, everyone is replaceable, and the second you are no longer “in the circle” you are either fired, or forced to quit because you can’t tolerate the horrible treatment. Secrecy is their main tool and it’s toxic to a company if they want to thrive and want a team that is invested in the company’s success.”

 “There’s zero accountability and discipline across the board. It’s so severe that it’s as if they’re in business to lose money.”

“Pay is not great unless you are senior… or executive… [no] tricle down transparency from upper management.”

You can read more here.

WHAT TO EXPECT FROM NASTYGAL.COM FROM HERE

Nasty Gal was recently acquired by Boohoo.com (an English e-tailer who also owns Pretty Little Thing) for $20 million. You can read more about the details here. According to WWD, “a core team of original Nasty Gal employees would remain in LA to ensure the DNA of the brand is preserved”.

I went on nastygal.com to find that the 50% off everything sale was over and they already have new arrivals. The price range is generally between $20-$100 (which is probably better targeted). They do not have a lot of products yet and do not carry any brands other than their own in-house brand right now. With the iffy experience their vendors have been having with Nasty Gal recently, I don’t imagine nastygal.com carrying other brands any time soon.

I imagine in the future Boohoo will capitalize on Nasty Gal’s highly valuable domain name and their various social media outlets (2.3 mil on Instagram, 235k on Twitter, 1.28 mil on Facebook and 269k on Pinterest), streamline products, continue targeting Nasty Gal’s niche customer group, reorganize the company structure and put in experienced managers.

I hope they will really be able to get nastygal.com because sometimes I like a little #nasty in me too. ; )

WHERE ELSE TO SHOP

Missguided

Missguided is pretty much the next Nasty Gal with less publicity because they don’t have an attractive, young, community college drop-out, female ex-CEO. They have some amazing party dresses, cute denim and sexy tops. Personally I think their home page could be reworked to attract more eyeballs like Nasty Gal’s did though.

Pretty Little Thing

Pretty Little Thing is the other website that was acquired by Boohoo.com. It has a similar aesthetic to the ‘party girl’ side of Nasty Gal but might be geared towards a slightly younger target customer. Here are some handpicked items I might pick up myself:

Shopbop

I personally love purchasing from Shopbop for their amazing shipping/return policies as well as the huge variety of clothes they carry. Some of the young and fun brands Nasty Gal used to carry Shopbop also carries! These are my favorite (albeit slightly more $$) picks from Shopbop:

Or you can shop their sale here: (Some AMAZING steals…)

PURCHASE SOPHIA AMORUSO’S BOOKS HERE:

Fur Jacket by Helmut Lang (Also loving this one by Rick Owens)

Mesh Bodysuit by Nasty Gal (Similar here and here)

Bra by Bordelle (You can also wear other statement bras like this and this)

Leather Skirt by Alice + Olivia (Similar here and here)

Mini Lady Dior by Dior

Over The Knee Suede Boots by Stella Luna (Similar here and here)

I hope this post has helped explain how Nasty Gal went bankrupt. I am not a financial or business expert so please leave a comment below if you have an opinion or have more to contribute!

xoxo Tina