Carol Kane

It took a minute, but Nasty Gal is again a growth story under its new British owners Boohoo Group.

“It’s a bit of the jewel right now,” Carol Kane, cofounder of Boohoo, said of Nasty Gal. She was until earlier this year the company’s co-chief executive officer with Mahmud Kamani, but both moved into new roles, her as executive director, he as executive chairman, as John Lyttle came in from Primark to be ceo. Kane led the acquisition with Kamani of Nasty Gal, and now oversees all of its creative and marketing efforts, so is understandably pleased with where the brand’s business is, compared to where it was when Boohoo bought it out of bankruptcy at the start of 2017.

“To take a brand and, in just a few years, it’s on triple-digit growth and actually delivering a nice healthy EBITDA and with a global presence, yes, it’s a bit of a success story,” said Kane, dressed in all black, sitting in a conference room in Nasty Gal’s downtown Los Angeles office. She was in town for a visit from Manchester, England, where Boohoo is based and where Nasty Gal now has its own, larger office.

Revenue for the brand grew 148 percent to $53 million over the last half year ended Aug. 31 (figures are based on the exchange rate for Sept. 25, when released). Considering Boohoo bought Nasty Gal for $20 million, it seems like a pretty good deal about now. The U.S. is still the brand’s biggest market, despite now being sold in the U.K, Australia and France, but the company declined to break out Nasty Gal’s profitability, saying it doesn’t do so for any one brand in the group. A spokeswoman allowed: “We have a very profitable model as a total business.” For the entire group, Boohoo reported for the half-year pre-tax profits of $55.8 million. The company also declined to provide cost of returns, a largely unreported factor for e-commerce businesses, but claimed to have relatively low return rates. Items sold per transaction are roughly three.

In part, Kane attributes the turnaround’s success to her insistence that Nasty Gal and all of Boohoo Group’s brands operate individually on the creative side of things, with totally separate offices and creative and marketing teams. She said that, and the fashion of Nasty Gal remaining “led by L.A.,” has kept its ethos and look intact and customers (women in their 20s to 30s) coming back. The other part is a newly focused marketing plan, using influencers with medium and small followings (medium to Kane is around 100,000 followers and small is in the four- to five-digit range), as well as major names. There will also be a twice-a-year campaign/collaboration with someone famous, beautiful and relatively outspoken, like Emily Ratajkowski, who Nasty Gal worked with this year on a spring collection and campaign.

“She wore a Nasty Gal jacket, well, a jacket that she wore as a dress, to the launch party, just a small dinner, nothing huge, and it sold out overnight,” Kane said. She added that the success of working with influencers, which can be difficult to track, always shows up in an immediate lift with the product they promote.

“It’s about finding the right girls — Nasty Gal has a very specific look, a voice, and it can’t just be anyone,” Kane said.

For the next collaboration/campaign launching this week, the brand got Cara Delevingne, the model-turned-actor-turned-model again, who is also about to debut a mini-collection with Balmain.

 

“It started with us just talking, ‘Wouldn’t it be cool if…’ and she’s so perfect for this,” Kane said. Meetings are being held now to decide whom to work with next. 

But more important to the business was building the brand from its previously anemic product offering and blowing the dust of bankruptcy off of it. The bankruptcy came as something of a surprise as Nasty Gal had long been pointed to as an indie e-commerce success story, but the business faltered around the 10-year mark as it struggled with profitability. It filed for Chapter 11 in 2016, quickly closed all of its retail stores and its founder Sophia Amoruso left the company.

“We had to scale. We didn’t inherit stock, we didn’t inherit supply chain,” Kane explained. “Really the number-one job was inventory, scale up and making sure the inventory we got could go across markets while keeping the brand alive with the heritage it came with.”

Scale it did. When Boohoo first launched Nasty Gal in 2017 as an online-only operation (with no plans to get back into physical retail), it did so with 400 styles. Now Nasty Gal has over 10,000 styles available. This has naturally led to an increase in sales and the results showed up within the first year.

“It takes a minute to build up traffic and marketing, so honestly it felt slow but [sales increased in] a matter of weeks,” Kane said. “In e-commerce, weeks feel like years, but it was a fast turnaround.”

Kane admitted the comps were and are very much in the brand’s favor, given Nasty Gal not only rapidly expanded its product offering but went from being “a hodgepodge of brands” to essentially private-label only. “You look and it’s suddenly up 1,000 percent, like, ‘Oh, this is lovely!’ but it doesn’t mean anything when you start from zero.” The company expects its push into more international markets to aid continued growth, however, and currently the U.S. is “booming” for Nasty Gal.

Sustainability, too, is something Kane is having a lot of meetings about lately. Boohoo is now zero landfill and using all recycled packaging, but it’s just starting to experiment with collections using recycled fibers and the like, aimed at reducing waste and fast fashion’s impact on the environment. This is something Nasty Gal will soon be taking part in, and while Kane noted that “consumer demand [for sustainable items] is not huge at the moment, in the next couple of years it will be.” Boohoo just this year added its first director of sustainability to lead an expansion of such efforts, but admitted enacting changes for a more sustainable future is not cheap or easy.

“As more and more companies [commit to sustainable practices], it changes the whole supply chain,” Kane said. “But it’s not going to happen overnight. It takes years.”

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