Skip to main content
BoF Logo

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.

Can Everlane Get Back on Track?

The digital-first basics brand known for “radical transparency” is betting a stronger stylistic point of view will help it boost performance.
Everlane collection 2023.
Looks from Everlane Editions: Dressed-up Daywear collection, a capsule for smart casual workwear. (Everlane)

For her first collection for direct-to-consumer basics brand Everlane, Mathilde Mader, the San Francisco-based company’s chief creative officer, did not focus on jeans or tank tops — or even a crisp white button down.

Instead, the line, named, “Everlane Editions: Dressed-up Daywear,” is a capsule for the woman who suddenly finds herself back in the office three-to-four days a week and wants something new to wear. Mader aims to differentiate what she’s selling through colour and non-obvious details, like a single pleat skewed to the side of a simple skirt. It’s not a particularly loud statement, but Everlane is betting that the Danish-born Mader — who was educated at Central Saint Martins and has worked with Kim Jones, as well as Marni and By Malene Birger — is sharp enough to get consumers excited about a label that they’re too often bored by — or don’t even know exists.

“I want Everlane to offer solutions,” she said during a recent interview.

The capsule, the first of Mader’s official designs to reach the market since her arrival one year ago, is unlikely to revolutionise the modern wardrobe. But its success is crucial to the future of Everlane — a brand that once influenced the trajectory of the American fashion industry, but has struggled as of late to entice consumers.


In early January, the company announced internally that it would layoff 17 percent of its corporate staff, and would also let go of a number of store employees — a move that follows cost cuts that were made in 2022. Last autumn, the company took on more debt — $65 million in revolving credit from CIT Northbridge, along with a $25 million loan from Gordon Brothers — to help fund inventory production. In an email viewed by BoF, the company said that staff reductions would help ease the pressure of increased inflation and an impending recession.

Layoffs in a time of economic uncertainty are commonplace: Amazon, for instance, said recently it planned to eliminate 18,000 jobs. But Everlane’s reductions may feel more significant relative to the size of its business — the company generates just north of $200 million in annual revenue — and its current situation. Over the past year, Mader and Andrea O’Donnell, who replaced founder Michael Preysman as CEO in January 2022, have been leading an effort to transform the maker of affordable basics into an accessibly priced fashion line with a point of view that could, O’Donnell believes, help it surpass $1 billion a year in sales.

Looks from Everlane Editions: Dressed-up Daywear collection, available Feb.1.
Looks from Everlane Editions: Dressed-up Daywear collection, a capsule for smart casual workwear. (Everlane)

The attempted overhaul got underway just as many of Everlane’s peers in the direct-to-consumer space faced new pressure from investors — public markets, venture capitalists and private equity firms alike — to not only scale at the rapid rate they once promised, but to do so while generating a healthy, steady profit.

In many ways, Everlane embodies the rise — and limits — of the “DTC playbook” that so many start-ups have followed over the last decade. But it wrote some of its own rules, too, which both helped it grow bigger and faster than peers — and contributed to its challenges.

Can a new strategy get Everlane back on track?

‘Radical Transparency’

Launched in 2011 with simple T-shirts at bargain prices, Everlane was marketed as a more honest answer to The Gap, another San Francisco-based brand whose market share (and mind share) has been on the decline since the early 2000s. While Everlane planned to do what Gap has long done — sell essentials like T-shirts, jeans and sweaters at a fair price — the company claimed to treat consumers with more respect by offering them more information than competitors, breaking down costs and sharing details on where its garments were manufactured. Branded “radical transparency,” this approach struck a chord with shoppers and inspired large swaths of the fashion industry to embrace similar rhetoric.

A growing number of Millennial women in their Phoebe Philo-inspired Stan Smiths, navy sweaters and bushy Glossier Boy brows fell for Everlane. Not only the style of the clothes and imagery, but the style in which it was delivered to them in their inboxes each week. The idea was to present one product at a time rather than a full collection — the email subject lines were smart, not too cutesy, often funny — and products were typically under $200, many under $100. How easy was it to buy a $35 T-shirt, or $120 pair of boots, when they were presented on a wood-grain platter?

Like Glossier and other DTC brands of the era, the product didn’t always live up to the hype. But when items are that cheap, and marketed as more ethical than other purveyors of cheap goods, there was little to feel guilty about. “Know your factories. Know your costs. Always ask why,” read a typical line of marketing copy.


Inside Everlane's Prince Street store in New York.
Inside Everlane's Prince Street store in New York. (Everlane)

Whether Everlane actually coined the term “radical transparency” doesn’t matter: it owned it.

By 2017, Everlane began opening retail stores, evoking the clean, white shelves of 1990s-era Gap. But unlike Gap, which was ubiquitous, with thousands of locations, the scarcity of Everlane locations meant that there were often lines snaking out the door. Preysman’s lack of experience in apparel manufacturing, marketing and retail was viewed as a positive by some investors and industry insiders, who believed fashion’s processes needed to change.

Diminishing Returns

The approach worked, until it didn’t. By the late-2010s, Everlane was ready to scale beyond its core audience of 28-year-old marketing executive types, generating more than $100 million a year in sales. But selling basics to the masses is a losing game if you aren’t as big as Uniqlo or Gap or Amazon, and even then it’s hard to be profitable.

Everlane was stuck in the middle, and not only was its loyal customer base growing tired of muddy product design and varying quality, but it was having a harder time attracting new, younger customers, in part thanks to the increasing costs of marketing online — and off.

That all came to a head in 2020, at the height of the pandemic, when Everlane was caught in just about every type of controversy a company could be caught in that year. There was the battle with its labour union, and a New York Times report questioning the authenticity of its “radical transparency” positioning and the quality of its workplace culture, resulting in the exit of Alexandra Spunt, the company’s chief creative officer, and often credited as Preysman’s thought partner.

Even so, the business was still growing, as consumers sought out sweats and tees through rounds of pandemic lockdowns. In August 2020, Everlane made its first major funding announcement: $85 million from L Catterton, the LVMH-linked private equity firm with stakes in Ganni and B&SH. L Catterton investments often fund significant retail expansion. Preysman, who worked in private equity before starting Everlane, had previously shown little interest in raising large amounts of capital. In a recent interview, Preysman — who is now the company’s executive chair and climate lead — noted that he “bootstrapped” Everlane for the first 10 years — by 2016, the company had raised less than $20 million.

Even as it prepared to use L Catterton’s funding to scale, rising competition and Everlane’s own executional misfires began to affect the business. In a May 2021 interview with BoF, Rebecca Robins, chief learning and culture officer at Interbrand, called Everlane “a first mover that’s been very much overtaken by a lot of brands in other spaces.”

While a collection-less approach worked in the early days — introducing one new style or colour way at a time — it resulted in a sprawl of products (too many T-shirt styles, cuts of pants, shoe colours) that didn’t necessarily hang together in a coherent way, and were increasingly difficult to communicate clearly about through emails and other online marketing.


And as more and more companies began to co-opt the idea of sustainability to win favour with conscious consumers, that message was harder for Everlane to own.

“Everlane was a relatively small, high-growth company headed into the pandemic, so we would expect sales to decelerate as it matured,” said Michael Maloof, director of marketing at Earnest Analytics. However, the “deceleration quickened in late 2020,” and sales have been up and down since.

Enter the Veterans

O’Donnell — a British merchant with experience across a range of categories, from luxury retail to footwear — and Mader, were tasked with stabilising operations and lifting the line up.

Their strategy? Give the whole concept some zhuzhing. While mid-priced brands have been squeezed by high-end luxury and ultra-cheap fast-fashion over the past 20 years, those that have found success in the middle, from start-ups like The Frankie Shop to behemoths like Tory Burch, have a strong point of view.

It’s a challenge for Everlane, which has long claimed its reason for existing is social responsibility, not a unique design perspective. So-called sustainability is an approach that has attracted a lot of attention — both good and bad, with consumers and media questioning its validity on some points. It certainly has less of a marketing impact than it once did: not only because a lot of companies now claim to be sustainable, but also because consumers are warier than ever of greenwashing.

Everlane remains committed to reducing its environmental impact, willing to defend its record as scrutiny increases. Even in its public statement about the layoffs, it noted that its mission continues to be to leave “the fashion industry cleaner than we found it.”

But without sharp fashion, Everlane has nothing to hang its message on. So Mader set out to clarify the look and feel of the brand, first, by pruning the existing collection. While permanent styles continue to drive the business — about 70 percent of styles carry over from season to season — there needs to be fewer of them.

“If you offer 10 different T-shirts, you’re not communicating to the consumer this is the T-shirt you believe in,” Mader said. “Call it gardening, call it weeding: part of my job is merchandising.”

With every new design, Mader is also thinking back to American sportswear greats like Calvin Klein and Donna Karan, who defined the country’s fashion principles: that simple, easy-to-wear clothing could be as elegant as a Made-in-France boucle suit.

O’Donnell and Preysman have also worked on the sourcing and pricing to increase gross margins, which are now 70 percent, up from 60 percent. For many years, Everlane simply could not enter any wholesale arrangements because of too-narrow margins, as the materials like organic cotton and recycled cashmere the company likes to use cost significantly more. (As do environmentally and socially responsible manufacturers.) So they’ve “nudged up” the prices a bit, according to O’Donnell.

The company said physical retail sales increased by double digits in 2022. but these still make up a small portion of overall sales. The company said it has “faced headwinds” online, where it generates roughly 80 percent of its revenue. Everlane declined to share specific revenue figures, but according to Earnest Analytics, a firm that tracks US consumer spending via credit and debit card data, Everlane’s sales have been up and down on a month-to-month basis – some months in 2022 sales increased by double digits, others they were down by double digits.

Everlane's Andrea O'Donnell and Michael Preysman.
Everlane's Andrea O'Donnell and Michael Preysman. (Peter Prato/Peter Prato)

The inconsistency may help to explain why the company has taken on debt in recent months to help fund inventory costs. The fact that $25 million of that money came from Gordon Bros — a liquidation specialist that also owns brands including Laura Ashley and Nicole Miller — raised eyebrows. But O’Donnell called the debt financing “standard practice.” Apparel firms often take out loans to fund inventory costs when cash flow is less predictable — it’s often looked down upon, or seen as imprudent, to use equity funding to buy more product. It’s also a way to raise money without having to do so at a lower valuation, something many start-ups were facing this past year as investors became more cautious.

‘More of a Brand’

Mader’s first collection is a way for Everlane to start over without losing everything. The capsule’s tagline — “Dress up. Dress down. Dress better.” — has the natural ease of that early marketing copy that resonated so strongly with the DTC generation. The difference, Preysman said, is the product: Everlane is moving from a business of “conceptual commodity basics” to being “more of a brand.”

The two ideas can co-exist, however. In its heyday, The Gap made basics fashionable. Today, Uniqlo is doing the same. A basics line can become a real brand if it has three things: the right price in relation to perceived quality, well-funded distribution across physical retail and e-commerce, and great design that feels original but appeals to a large spectrum of people (the masses at the low end, the elites at the high). If finely marketed, it’ll slip right into the zeitgeist, the way Gap did in 1969, and in 1984, and again in 1997. And the way Everlane did in 2012.

It took 30 years for Gap to peak. Preysman sees this new iteration as one small step toward its next phase of growth. (Bigger steps will include wholesale, more stores and the behind-the-scenes changes O’Donnell and Mader have already implemented.)

“Trying something new at the scale that we’re at takes a lot of guts,” Preysman said. “I think it can work really well. The hard part is, it takes a couple of cycles.”

Further Reading

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.

Amidst Tumult, Everlane Raises $85 Million

The direct-to-consumer brand known for its promise of radical transparency has come under fire this year, but a new cash infusion led by LVMH-linked L Catterton is a stabilising endorsement.

In This Article

© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions

More from Retail
Analysis and advice from the front lines of the retail transformation.

At Front Row, Accelerating New Routes to the Consumer

Formed of five different agencies with complementing areas of expertise, Front Row partners with beauty, health, wellness, and consumer brands to accelerate their e-commerce growth. Here, its chief brand officer, Christopher Skinner, shares the challenges and opportunities in reaching new consumers.

view more

Subscribe to the BoF Daily Digest

The essential daily round-up of fashion news, analysis, and breaking news alerts.

The Business of Fashion

Agenda-setting intelligence, analysis and advice for the global fashion community.
The Business of Beauty Global Forum
© 2024 The Business of Fashion. All rights reserved. For more information read our Terms & Conditions, Privacy Policy, Cookie Policy and Accessibility Statement.
The Business of Beauty Global Forum