Nasty Gal is starting to crumble.
Bloomberg is reporting that the company is going to lay off 10% of its staff.
The company’s CEO Sheree Waterson told Bloomberg that axing these 19 employees is part of a “strategic restructuring.”
“We have seen other tech and apparel brands make similar types of business decisions recently,” Waterson wrote in a memo that Bloomberg received. “It is imperative for us to be nimble and think strategically about the future of our brand.”
The company was once extremely successful. Bloomberg notes that it worked its way from a fledgling eBay store to an $100 million business. Bloomberg adds that the company received an additional $16 million in funding last year from former JC Penney CEO Ron Johnson and Index Ventures.
But the company is facing mounting competition.
“Since their beginnings, companies like Nasty Gal and Birchbox [which laid off employees last week] have led with innovation. And so yes, perhaps they grew too quickly with innovation. And now there are other market disruptors in each of these categories that they now have to compete with,” Valerie Davis, industry expert and Senior Vice President of Paid Media at digital marketing agency PM Digital, wrote in an email to Business Insider.
“Such companies were extremely innovative in their markets, and so they got funded quickly. They spent without necessarily having an eye for profitability, in order to increase penetration and build up their customer base, which was the ultimate goal at that time. Except now, the market has softened, and paired with other market disruptors, it’s ‘slowed the faucet’, and now these companies need to turn a profit. The issue is less of a business model change, rather they’re facing a competitive climate with a lot of disruption,” she wrote.”
Last January, Nasty Gal’s iconic CEO Sophia Amoruso stepped down from her position after founding the company in 2006.
And in summer 2014, the company laid off 10% of its staff, Re/code reported last year.
In her memoir #GIRLBOSS, Amoruso said she never planned on running a huge company.
“I was 22 and, like most 22-year-olds, I was looking for a way to pay my rent and buy my Starbucks chai. Had someone shown me the future of where Nasty Gal would be in 2014, I would have gasped in revulsion, thinking, Oh, hell no, that is way too much work,” she writes.
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