Online fashion retailer Nasty Gal has laid off 10 percent of its staff, as the purveyor of edgy women’s clothing cuts costs amid an uncertain financing and retail environment.
CEO Sheree Waterson told the company in an email that the cuts were necessary as the “market in which we operate is changing, both in retail broadly and apparel specifically.” Nineteen employees across several departments were let go. Nasty Gal also laid off some staff in 2014.
The layoffs underscore the difficulty mature e-commerce startups can encounter as they transition from being a hot new brand to the long slog of building a more traditional retail business. In short, building a retail brand is really hard and technology can only afford you so many shortcuts along the way. Online beauty brand BirchBox announced layoffs of 15 percent of its staff last week, as startups in e-commerce tighten belts as investors become more wary of unprofitable growth.
Nasty Gal was founded by Sophia Amoruso in 2006 as a vintage shop on eBay. Over the years, she grew the Los Angeles-based company into an online business with more than $100 million in sales, fueled by a passionate customer base among millennial women and a strong social media presence where it boasts more than one million Facebook followers and nearly two million on Instagram. The company sells its own line of clothing as well as those of other brands and designers.
Amoruso turned over the CEO role to Waterson in early 2015, saying at the time that the company needed a more experienced leader. Re/code reported at the time that Amoruso had been telling potential investors that 2014 revenue growth would be flat or up slightly. She declined to give an update on 2015 sales figures when asked on Thursday.
Asked if it’s possible that Nasty Gal has hit its ceiling of growth, Amoruso toldRe/code, “We believe that future growth comes from being where our customer is, and that is not purely online. We have two stores and a lot of room to grow.”
The company has raised more than $60 million in venture capital from investors including Index Ventures and former Apple retail chief Ron Johnson.
Written by Jason Del Rey of Re/Code