Reformation is taking its mix of sustainability and big-time growth to the auction block.
Multiple sources told WWD that Goldman Sachs is managing a process to sell the buzzy company, which has made a name for itself as a leader in the area of sustainability and is said to be posting annual sales growth of more than 50 percent.
First-round bids are due May 15, according to one person familiar with the process. Goldman Sachs declined comment on Monday and the company could not be reached for comment.
While Reformation’s valuation won’t come into focus until bids are submitted, the company is said to be looking for a big number.
The process is notable in that it brings a growth-y and accessibly priced apparel brand to the market, which has been awash in distressed retail, luxury and tech, but very little fashion. The involvement of Goldman, a top-tier investment bank, adds extra weight to the auction.
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Reformation was founded a decade ago by chief executive officer Yael Aflalo, who was proudly declaring sustainability as a cornerstone of the brand before it was fashionable.
“When we first started, I don’t think many of our customers cared about sustainability,” Aflalo said at the WWD CEO Summit in October, pointing to online response to the brand’s early posts on the topic. “It was like crickets, no comments. Now, the engagement on our social media posts rival that of any other posts.”
A survey conducted by the brand showed that its sustainability mission clicked with customers.
“We were shocked to see how many people were motivated to purchase with us, not on an acquisition basis, but on a retention basis,” Aflalo said. “People stay with us longer because we’re sustainable.”
Now the company — and its investors — will have a chance to cash in on that loyalty.
Reformation raised $12 million from 14W, Stripes Group and other investors in 2015 and another $25 million in 2017. The Series B round included investment from Imaginary Ventures, which was cofounded by Natalie Massenet, who also founded Net-a-porter (although she left that business in 2015).
The company has been using the money it raised last year to add physical stores, which have a decidedly techie bent, and to beef up its factory in Los Angeles, where about 60 percent of its looks are produced.
As of now, the brand has a relatively tight distribution model, selling through its own web site, its 13 stores, Nordstrom and, as of last month, Net-a-porter.
Previously, Reformation and Net-a-porter tested the waters with a capsule collection. Now the luxury e-commerce site carries Reformation’s 11 signature styles, including linen dresses, snakeskin skirts and wide-leg pants, at prices from $98 to $268.
Elizabeth von der Goltz, global buying director at Net-a-porter, said last month, “We could clearly see the appetite our customer has for Reformation. The brand has gained a strong following as their business model really allows them to adapt to the evolving tastes of their customers which we see working within our buy-now-wear-now strategy.”
All of that helped tee up a possible sale of the business, potentially tempting a buyer to come in and capitalize on the brand’s strength with more distribution.