Boohoo, based out of Manchester, England, confirmed its bid by the company’s subsidiary, Boohoo F I Ltd., to acquire some of Nasty Gal’s intellectual property, making it the stalking horse bidder in a bankruptcy auction scheduled for next month.
“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,” the company’s joint chief executive officers Mahmud Kamani and Carol Kane said in a statement. “Following our recent acquisition of PrettyLittleThing.com we believe this would represent an ideal next step in inspiring an ever-growing range of young customers internationally.”
Boohoo said earlier this month it would buy fashion e-tailer PrettyLittleThing.com’s parent 21 Three Clothing for about $4.04 million, based on current exchange rates.
The offer would not include components of the operating entity, which would include costs such as rent. Nasty Gal wouldn’t be the only company having trouble finding a buyer for the operating company. American Apparel, which filed for its second bankruptcy in November, has attracted a suitor in Gildan Activewear Inc. However, the Canadian T-shirt firm’s proposed starting price of $66 million does not include American Apparel’s retail fleet. The Los Angeles firm is in the process of finding a suitor for the stores, but won bankruptcy court approval more recently on the liquidation and closure of those doors that are not sold via the bankruptcy auction. A judge approved the closure of nine underperforming doors ahead of the Christmas holiday with the company estimating any other closures will be completed by April.
For Nasty Gal, revenue from the sale of vintage clothing — which dates back to the company’s roots as an eBay store selling vintage — and third-party brands is not part of the deal.
Nasty Gal entered brick-and-mortar in 2014 with the opening of a store on Melrose Avenue, followed by a second unit on the Third Street Promenade in Santa Monica the following year, but the company has shared very little on the performance of those doors since then or the go-forward strategy for physical stores.
The announcement follows Boohoo’s registration in the U.K. of the business name Nasty Gal Ltd. less than two weeks after the U.S. company’s Nov. 10 bankruptcy filing. Boohoo, at the time, did not comment on the reason for the registration.
Nasty Gal, launched in 2006 by Sophia Amoruso who has a 55 percent stake in the business, quickly grew, lauded as a model in the digital retailing age for building a well-loved online brand that was carefully cultivated via the voice of Amoruso herself. However, the company’s rapid growth appeared to be its own stumbling block, according to bankruptcy court filings, and the firm hired Peter J. Solomon Co. in September 2015 to shop for a buyer. The continued deterioration of the business made it difficult to find a suitor, court documents said.
Nasty Gal’s net revenue for the fiscal year ended Jan. 30 fell 9 percent from the year-ago period to $77.1 million. Earnings before interest, taxes, depreciation and amortization went from negative $6.3 million in its fiscal year ended January 2015 to negative $15.4 million in the 12-month period ended January of this year. Boohoo said the company had a net loss after taxes of $21 million for the most recently ended fiscal year.
“People like to ask what I’d tell my younger self if I had the chance,” Amoruso said in an Instagram post from the weekend. “What I’d do differently if I could go back in time. I’ve made up answers to make the question go away, but the truth is this: nothing. The sky is always and never falling. Old news and no news. Bankruptcy and divorce. Donald Trump and pneumonia. And the world watching. Boo hoo? No way. Healing my wounds before I have time to lick them….”