Online fashion retailer boohoo completes Nasty Gal acquisition

Internet Retailing

6th Mar 2017

British-owned online fashion retailer boohoo Group has officially acquired US e-commerce company Nasty Gal, which filed for bankruptcy last November.

The cult brand favourite started by Sophia Amoruso will continue to operate as a standalone site under boohoo Group’s leadership.

The UK retailer said it will retain a core team of original employees in Los Angeles to ensure the DNA of the brand is not lost, though Amoruso, who resigned from her role as CEO in 2015 and executive chairwoman in 2016, is not among them.

“We are thrilled to have Nasty Gal as part of our family, and are excited by the opportunity to expand the company into international markets.

“This is a distinctive brand with a fiercely loyal customer base, and we are committed to preserving that as we move forward into a new chapter,” Carol Kane, boohoo Group’s joint CEO and interim CEO for Nasty Gal, said.

Indeed, clearly delineating between boohoo’s own brand and that of its acquisition will be crucial to the e-retailer’s success going forward, according to analysts.

Commenting on boohoo’s acquisition of a majority stake in PrettyLittleThing last year, Verdict Retail analyst Honor Strachan said, “[It] is important that the group continues to run the businesses autonomously to prevent overlap and sales cannibalisation, and ensure clear brand identities.”

At the same time, there are opportunities for boohoo, founded by Mahmud Kamani and Kane in 2006,  to capitalise on shared logistics, manufacturers and customer data, as it clearly has global growth on the agenda.

With its US$20 million acquisition of Nasty Gal, boohoo gains entry into the US market. However, analysts there say the company provides a cautionary tale of scaling an e-commerce brand.

According to a report in the Los Angeles Times, sales dropped from nearly US$100 million in 2012 to US$77 million in 2015, as Nasty Gal slowed its spending on marketing and advertising.

The company also opened two bricks-and-mortar stores in Los Angeles and a 500,000-square-foot fulfilment centre in Kentucky, which drained funds.

boohoo is looking to avoid these missteps. The two offline stores were not included in the acquisition, and Nasty Gal said it plans to close the fulfilment centre and lay off the 70 employees who worked there.