What Really Happened To Nasty Gal?




Nasty Gal is filing for bankruptcy. When we first broke the news the reaction was genuine shock. How could a company that was going from strength to strength be facing financial difficulty?

How could a home-grown empire fail after so many years of success?
The rumor mill went into overdrive, everybody was stunned. Many retailers have filed for bankruptcy for protection before, in fact, it’s not a big deal, Forever 21 has reportedly had difficulty paying its vendors, whereas American Apparel, Delia’s, Aeropostale, Quiksilver and Pacific Sunwear amongst others have filed for bankruptcy. Banana Republic is closing in the UK, too.

But this feels different. We’ve followed Sophia’s journey, we’ve heard about her humble beginnings, we’ve rooted for her and her company because it gave us hope that similarly humble beginnings could create an empire. Many of Nasty Gal’s vendors were owed several thousands of dollars in back payments. Some were owed more than $100,000.


Nasty Gal was plagued by problems.
By the end of 2015, Forbes estimated that the company had more than $300 million in revenues. They opened their first store in LA in 2014, followed by one in California. Forbes also added Sophia to the list of America’s richest self-made women. The fact that she was a poster child for ‘build your own business’, means that this turn of events has scared a generation of people who looked to emulate her success.

According to The Fashion Law, Nasty Gal was plagued by problems. It cut jobs this year and last, Amoruso stepped down from the role of CEO, and it’s been on the receiving end of an array of lawsuits from former employees citing discrimination and intellectual property rights holders.

WWD reported that Nasty Gal’s lender, Hercules Technology Growth Capital Inc, has rejected additional requests for a loan from the company, just two days into filing for bankruptcy and that lawyers for Hercules allege that the Chapter 11 proceedings will kill the brand.

As a generation, we are rooting for her.
Sophia Amoruso briefly touched on the situation during her conference in Australia on November 11, “Things that I would have freaked out about two years ago I can handle now,” she said. “Hopefully that is how I feel two years from now about this. It was my first business. I got really far.”

We feel for her because she emerged from her company a celebrity, with her own agent and publicist. In the Nasty Galaxy book, you can see just how beautiful her house (and life) seems, and her motivation, determination, and personality compelled thousands of young women to go fearlessly into their own business ventures. Businesses run and operate on lots of different levels, but Sophia’s face is the face of Nasty Gal, which must feel awful.

According to one unnamed executive, reported by BOF, the publication of #Girlboss was the “nail in the coffin” for Nasty Gal. “She was savvy, and she saw the writing on the wall,” they said.

No longer the American Dream.
Sophia was the ‘American Dream’ in a way, the new American Dream, anyway. Using the internet to propel yourself into a world of recognition, giving talks and imparting advice to people who want to be just like you. Creating a business people wanted to be a part of. Doing what she loved.

So many small companies know Nasty Gal’s story, heralded Sophia’s success as the ultimate Universal go-ahead. If she can do it, anyone can.

Now everyone’s taking a step back. Logistics sometimes get in the way, there are scary financial challenges laying ahead. And of course, Nasty Gal will probably survive (at least we hope so!) and thrive, and when they do, the lesson we’ll all have learned is that there are tough calls to make and that, in business, you need to get smart about your finances fast!

In the words of Sophia Amoruso: “There are secret opportunities hidden inside every failure.”


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Managing Editor

Beth is the Managing Editor of CGD. She is a graduate of the Penguin Writer's Academy, has published a short story and loves to read creative writing manuals in her spare time.

  • Natalie Harney

    Really interesting piece, I was so sad when I heard the news about Nasty Gal but you’re right it’s not the end for Sophia or any of us who have the same dreams

    – Natalie

  • Bella

    It doesn’t sound like you genuinely feel sorry for her.

    This sounds like gossip and this being career girl daily I expect you to be sounding more supportive but it just seems like you’re either looking to drive more traffic or I’m not sure. How is this article different from the last? . Is this a gossip site or a lifestyle site for women to feel empowered?

    People should still buy Sophia’s book. Her wise words still stand. Yes her business has issues and it may or may not survive but how many successful people haven’t failed?

    • Erin

      I see your point, but I want to know about the business side of companies that I admire, and the why’s behind the good and the bad. To be fair, a few other companies were mentioned that also filed for bankruptcy, and are doing well today. I think Sophia is brilliant, and I’m curious to see what her next move is. If anything, it makes me want to by her book even more. I’m not sure, this doesn’t appear like gossip to me.

  • Charmaine Ng

    When I first heard about the Nasty Gal bankruptcy (from you guys!), I was so shocked. Thank you for bringing continuous news on how things are going for them here on CGD!
    – Charmaine

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