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Beyond Disruption: Everlane’s Next Chapter

After public scandal threatened its ethical image, CEO Michael Preysman believes the L Catterton-backed disruptor can still win on radical transparency even as competitors lay claim to the sustainable fashion space.
Everlane founder and chief executive, Michael Preysman. Everlane.
Everlane founder and CEO Michael Preysman. Everlane.

Everlane learned a hard lesson this past year: radical transparency, the slogan that helped position the brand as a leader in the crowded online fashion marketplace, is a moving target.

The direct-to-consumer label had become a go-to for a fast-growing cohort of conscious consumers, who were won over to the brand’s T-shirts, jeans and other wardrobe staples by its promises to partner with ethical factories, source only the best materials and expose information about the true cost of every product. “Radical transparency” defined the brand; Everlane even filed to trademark the term in 2017.

But though Everlane was early to build a sense of mission into its messaging, its approach was still evolving and so were consumer expectations. The company made a splash with its launch of “clean” denim in 2017, and a year later said it would be virgin plastic free by 2021. But it had been slow to publish more targets or update on its progress. A crowd of rivals now boasted similar credentials. Even as sales continued to rise, Everlane was beginning to attract a hum of criticism that the most radical thing about its operations was its marketing.

But last year, it was planning to start talking more about its efforts to reduce its environmental footprint, starting with a flagship new commitment to only use organic cotton by 2023.

“What we see is people saying we’re greenwashing because consumers don’t have access to the information,” chief executive Michael Preysman told BoF at the time.

The rollout began in mid-March, just as the World Health Organisation declared Covid-19 a pandemic. Consumers wouldn’t be interested in hearing about organic cotton, or fashion generally, for a while.

Instead, their attention turned to the social upheavals of the pandemic and the anti-racism protests that followed George Floyd’s murder in the summer. Expectations of what radical transparency should mean shifted rapidly, and brands’ corporate culture became the subject of intense scrutiny.

As the pandemic ravaged the retail market, Everlane faced a barrage of criticism for failing to live up to its progressive values internally. It was a blow to the company’s reputation at a critical moment of opportunity; the pandemic was accelerating the trends toward digital and conscious consumption that helped fuel Everlane’s growth and the company’s claim to a leading position was slipping.

But Everlane has acted swiftly to reposition. It’s pledged to do more on sustainability and racial justice, appointed a suite of experienced new executives and attracted a powerful new backer in LVMH-linked private equity firm L Catterton.

Its goal is to build a dominant market position, and its strategy is simple: stay the course.

“We are doubling, tripling down on that core effort of — how do we empower positive change,” Preysman said in an exclusive interview last month. “What differentiates us, at the end, is our commitment to it.”

Whether consumers feel the same will define whether Everlane becomes a market leader or simply another faded basics brand.

“Fashion is forever fickle,” said Simeon Siegel, a managing director at BMO Capital Markets. “It’s the companies that are the hottest that shine brightest, but have to fight the hardest to maintain the sparkle.”

Everlane, Disrupted

For most of the last decade, Everlane ranked as an odds-on favourite for those industry watchers inclined to bet on which of fashion’s new generation of venture-backed start-ups might make it as the internet age’s answer to Gap or J. Crew.

The direct-to-consumer brand, which sold exclusively online until opening its first store in 2017 in New York, enjoyed a meteoric rise, fuelled by a powerful mix of product, marketing and kismet. In 2016, the company’s reported value was around $250 million. A year later, The New Yorker ran a story with the headline ‘How Everlane Hacked Your Wardrobe’. In 2018, sales hit nearly a quarter of a billion dollars, more than doubling from a year earlier, according to data from, a firm that tracks the performance of private companies.

The brand externally had such a lofty ambition and we didn’t live up to it internally.

Timing was everything. Fashion was getting more casual, and the brand’s minimalist take on elevated basics jibed with consumers looking for a more exciting alternative to what they could find at the mall. As an early mover in the direct-to-consumer market, it could sell its clothes at lower prices than competitors reliant on stores to attract customers. And explaining to customers how it set its prices was an effective way to make Everlane clothes seem affordable but not cheap. Later, its adopted slogan of radical transparency would meet a growing appetite for products with a positive impact.

But last year, that trajectory veered sharply off-course.

The pandemic hit sales hard. Although countless online brands and retailers saw a sales bump while consumers were stuck at home, Everlane by 2020 derived a significant chunk of its sales from its stores (this too was a departure from the brand’s roots; Preysman famously told The New York Times’ T Magazine in 2012 that he would “shut the company down” before opening a physical store). More than half the company’s sales growth was expected to come from its brick-and-mortar locations last year.

“It was very, very rocky,” Preysman said. “I think it would be fair to say that there’s a moment where you look at it and you’re like, ‘Oh my god! If this continues for six to 12 months, how are we going to make it?’”

Online sales helped make up the shortfall, and Everlane said business was flat last year. But the challenges weren’t just financial. After the company laid off a group of employees, some of whom had been seeking to unionise, Sen. Bernie Sanders accused it of union-busting in a tweet that elevated the dispute to the national stage.

“This was the hardest decision we’ve ever made,” the company tweeted in response. “This was not about the union,” an attached note attributed to Preysman said. “We are not profitable and do not have a cash balance.”

Then as anger around anti-Black racism surged following the murder of George Floyd last summer, a group of former employees published a series of accounts alleging the brand had a poor track record when it came to racial justice, citing incidents of bullying and discrimination. The New York Times ran a story that concluded Everlane’s promise of radical transparency was unravelling.

“The brand externally had such a lofty ambition and we didn’t live up to it internally,” Preysman said. “When everything goes wrong, it’s hard to do right by everybody.”

For some employees and consumers who had believed passionately in the brand’s stated mission, its missteps felt like a personal betrayal.

“Everything I thought I knew about this company was wrong,” said Leah Wise, a blogger, who wrote a public post titled “Why I’m Quitting Everlane” after the brand was accused of union busting. “This amount of trust in a for-profit company is sort of wrong.”

First-Mover Advantage

Everlane wasn’t the only company to face a double whammy of financial pain and social outrage over the last year. But the criticisms struck at the core of its image at a critical moment in its evolution, when it had an opportunity to make the leap from a fast-growing challenger to fashion’s major leagues.

The transition from start-up to fashion industry heavyweight has proved elusive for its generation of direct-to-consumer darlings. Many have attracted huge investment over the last decade but struggled to become profitable as look-alike competitors muscled in on their turf and customer acquisition costs spiralled. That’s on top of the universal challenge in fashion to stay relevant.

“The hardest thing for any company is to really disrupt a category, become the category leader and then maintain its reputation of continuing to innovate in that space,” said Jonathan Mildenhall, the co-founder of marketing consultancy TwentyFirstCenturyBrand, who joined Everlane’s board in September. “Everlane is now in this space where we’ve got to compete against bigger players and new start-ups.”

While Everlane’s initial pitch of price transparency resonated as iconoclastic in an industry that thrived off secrecy, promising to operate more sustainably is now table stakes.

Amongst other contenders, self-styled material science company Pangaia has emerged as a blockbuster pandemic success, generating $75 million in revenue last year and turning a profit. Allbirds, known for its wool sneakers and its commitment to tackle emissions, is now a direct rival with its own apparel line and a $1.7 billion valuation. It is laying the groundwork to go public. And incumbent giants like H&M Group are marketing capsule collections and spin-off brands as sustainable.

The end-game [for Everlane] is an iconic American apparel business.

Everlane “very much were a first mover,” said Rebecca Robins, chief learning and culture officer at brand consultancy Interbrand. But “they’re a first mover now that’s been very much overtaken by a lot of brands in other spaces.”

For some consumers, the company has fatally damaged its credibility.

Aja Barber, a writer, stylist and consultant, whose commentary on sustainable fashion enjoys a sizeable following, was an early adopter of the brand. But increasingly she started to view the company as simply putting a sustainable wrapper on a fast-fashion model, a view amplified by its treatment of its workers last year and failure to adopt inclusive sizing.

“I’m never going to be an Everlane supporter again,” Barber said. “They just completely missed the boat.”

Building an Icon

But Everlane has powerful backers in its corner. Last September, it secured an $85 million cash infusion led by L Catterton. The fashion uber investor had been looking at the brand for years and the pandemic offered an opportunity for it to get its foot in the door at a company it believed still sits at the molten centre of one of the hottest long-term consumer trends.

The deal valued the company at $825 million, according to a person familiar with the matter, up from an estimated $500 million at its last funding round in 2017, according to Pitchbook.

The company’s gone on a hiring spree, too. It’s appointed former Nike executive Sophie Bambuck as its first chief marketing officer and former Uniqlo global creative director Shu Hung joined Monday. It’s hired its first director of sustainability and brought on board new leaders for its digital and people teams. It’s also strengthened its board, adding Mildenhall, L Catterton partner Matt Leeds and fellow investor and Net-a-Porter founder Natalie Massenet.

The appointments are strategic as much as they are about tackling last year’s crisis, geared towards preparing the company for expansion and ensuring it can deliver on the fundamentals of any successful apparel brand: desirable product and cultural relevance.

America’s fashion landscape is littered with the restructured skeletons of brands that forgot these core tenets. But coupling those fundamentals with Everlane’s long-standing positioning as a values-based brand is how its backers are betting it will win.

While some select consumers may have turned away from the brand, Leeds said its community’s enduring love for Everlane was striking, better than almost any other company he’d ever seen L Catterton examine. And the brand has yet to penetrate large swathes of the market.

“Ten years down the road, is Everlane over $1 billion of revenue? I think absolutely,” said Leeds. “The end-game is an iconic American apparel business.”

Shifting Expectations

It’s a compelling story, but Everlane isn’t the only one jostling to claim it.

Adidas is also on track to eliminate virgin plastic by 2024; Allbirds has set a target to ensure all the wool it sources isn’t just organic, but regenerative, meaning its impact on the environment could actually be positive. Reformation, another private-equity-backed label, has committed to providing living wages across the company. Last month heralded a frenzy of fresh commitments across the industry to mark Earth Day.

“The notion of being a mission-driven company is now the price of entry rather than sufficient reason for existence,” said BMO’s Siegel.

Everlane scores poorly in some rankings of fashion brands’ sustainability performance. Good on You, which analyses public information to rate brands’ performance on issues relating to labour, environment and animal welfare, scores it ‘Not Good Enough’ (Allbirds and Reformation are both rated ‘Good’). The company loses points because it doesn’t provide enough information on efforts to reduce emissions, textiles and hazardous chemicals, support collective bargaining and living wages in its supply chain or establish a policy for animal welfare.

Everlane store in Austin, racks of clothing pieces in solid colors.

Everlane said it is working to provide more transparency around its efforts. People familiar with the company say the steps it has already taken are substantive.

It spent two years to find and embed polybags — the plastic wrappers used to protect clothes when they’re transported from factories to retailers and distribution hubs — that are 100 percent recycled. It’s maintained its commitment to shift to organic cotton despite soaring prices — more than half of its cotton products will be made from organic cotton this year. And it’s investing to build a better understanding of its impact.

“They’re very committed and they don’t take shortcuts,” said Sanjeev Bahl, chief executive of Saitex, a manufacturer known for its responsible practices that produces Everlane’s denim.

Everlane wouldn’t be the first brand to make a comeback to dominate its market niche after suffering a reputational crisis. Lululemon, which helped create the now-ubiquitous athleisure trend, hit a series of speed-bumps along the way, including complaints about the quality of its yoga pants and insulting remarks from the brand’s founder. Even Nike stumbled in the late ‘90s amid a series of scandals over sweatshop conditions in its supply chain.

But both Nike and Lululemon were publicly traded brands, more established in their footing when they were tested. And consumers didn’t have the same access to social media, with its capabilities to amplify and spread outrage.

“Today consumers are much more invested in these statements … so it hurts the brand more if it claims to be something it’s not, especially if the mission is core to the brand,” said Thomaï Serdari, professor of marketing at New York University’s Stern School of Business. Expanding into new markets and targeting new consumers can help mask that, but long-term, if brands “haven’t quite been transparent and actually faced several types of scandals, I think you can never recover from that,” she said.

Changing the Narrative

Behind the scenes, Everlane has been making changes to restore its credibility, reframe the conversation and boost its product and positioning against the rising tide of rivals.

The brand removed chief creative officer Alexandra Spunt, who emerged as a particular focus of criticism last year. While similar scandals cost many CEOs and founders their position in 2020, Preysman has not stepped back. (“I was not at the centre of this,” he said. “It’s my job to fix it.”)

In addition to strengthening the expertise on its board and executive team, Everlane’s new hires have also helped to diversify at the top.

We have the opportunity now of changing the narrative, rebuilding with a louder message.

The company has said it is developing programmes and processes to ensure pay equity, improve career development and support, hire and retain people of colour and from under-represented communities. It’s earmarked an annual budget of $100,000 for internal diversity and inclusion initiatives and brought on a number of partners to help train, educate and develop accountability internally. It’s joined the Black in Fashion Council, committed to new goals to ensure representation in its imagery and doubled its donations to organisations that support racial justice and address inequality.

Last month, it published an update on its efforts to eliminate virgin plastic. It’s 90 percent of the way there. But the last 10 percent is proving tough. Recycled buttons, zippers and other kinds of trims are still too fragile to pass quality control. Stretch for clothes and structure for shoes are other areas where there’s still no satisfactory substitute. Everlane used the challenge as an opportunity to engage with its community. It’s planning to host a series of workshops and opened applications for $100,000 in funding to support research into solutions.

More initiatives are on their way. It’s planning to publish science-based emissions targets that align with global goals to limit global warming within the next six months.

“We have the opportunity now of changing the narrative, rebuilding with a louder message,” said Bambuck, the brand’s newly appointed CMO.

What Consumers Want

Last month, Everlane launched swimwear, perhaps the first real test of how a broader swathe of consumers would react to the brand’s direction under its new leadership.

Last month, Everlane launched swimwear.

The swimsuits are 82 percent econyl, a recycled nylon fabric, and were fit-tested on 112 women. The seven styles in interchangeable block colours had simple lines and a sporty look that echoed the booming trend for athleisure. In a departure from the label’s usual minimalist look and feel, the campaign images depicted a diverse group of women in hazy, sun-drenched settings moving and laughing.

It was a blockbuster, exceeding sales expectations by nearly 90 percent. It ranked as the biggest women’s launch week in the brand’s history, outpacing the company’s first denim drop, which generated $1.2 million in sales on its first day.

“I didn’t know if it was going to translate … [but] we beat our launch week plan on day one,” said Bambuck.

The company will open two to three new stores this year and plans to double its footprint in 2022. Revenue is expected to grow by 25 percent in 2021. Despite last year’s disruptions, followers and engagement across online and physical distribution and communication channels have grown 40 percent over the last year, boosted in particular by new international growth, the company said.

The company may have lost credibility with some early adopters, but its backers say Everlane still has a first-mover advantage.

“Nowadays it’s very fashionable to have sustainability as part of the brand proposition, but Everlane was doing this since before it was cool,” said Leeds. “There are only so many brands that have that vintage.”

Editor’s Note: This article was revised on 3 May 2021. An earlier version of this article mis-credited a photo of the Austin store. It also stated that Everlane has yet to fulfil a commitment to hire a Black person to senior leadership. That is incorrect. Everlane’s new chief marketing officer, Sophie Bambuck, identifies as Black.

Related Articles:

Measuring Fashion’s Sustainability Gap

The Age of the Enlightened Consumer

Corporate Activism Put to the Test

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