Fast-fashion giant Shein to buy eco-friendly Everlane

Everlane, the retailer that is disrupting the fast fashion industry by promising affordable, ethically sourced and sustainable clothing, is being acquired by Shein, the king of fast fashion.

A letter from CEO Alfred Chang to Everlane employees confirming the deal was obtained by The Associated Press on Friday.

Everlane, headquartered in San Francisco, did not disclose the purchase price.

Chinese firm Shein declined to comment.

L Catterton, Everlane’s majority owner, could not immediately be reached for comment.

Everlane was founded in 2011 by Michael Preysman and Jesse Farmer with the mission of producing eco-friendly and affordable clothing.

The company has published regular audits of pay and working conditions, as well as the brand’s environmental impact.

The online retailer opened its first physical store in 2017.

However, the company has been embroiled in controversy over the treatment of its employees in recent years, according to media reports.

Everlane, joined by other eco-friendly brands like Allbirds, has realized that offering a more transparent view of its factories isn’t enough for consumers, according to independent retail analyst Bruce Winder.

Shoppers are also looking for more affordable prices and “novelty is wearing off,” Winder said.

Quoted Allbirds.

After sales of the once hugely popular shoe plummeted, the company rebranded itself as NewBird AI and is now focused on artificial intelligence and cloud computing services.

L Catterton began acquiring significant shares in Everlane in September 2020 and became the majority owner.

It also owns a significant stake in the Boll & Branch, Etro and Birkenstock brands.

Preysman officially resigned in 2022.

Online retailer Shein was founded in China in 2012 and has become extremely popular among teenagers and young shoppers with its trendy dresses and sandals priced at US$15 ($A21).

The majority of products are mass produced and sewn by workers in a network of factories in China.

It moved its headquarters to Singapore.

“Like many brands, we face increasing pressure in a rapidly changing retail environment,” Chang wrote in his letter.

“This partnership allows us to remain independent and gives us the stability and resources to make a greater impact without compromising the quality and standards that make Everlane what it is.”

Chang, who becomes CEO in 2024, wrote that the deal will enable the business to invest more in its product, innovation and staff.

He emphasized that Everlane will remain an independent brand, staying true to its “sustainability” commitments.

Chang said he will continue as CEO and his leadership will remain in place.

The takeover bid comes at a time when Everlane is in dire straits.

Sales have fallen and debts have increased, according to Neil Saunders, managing director of GlobalData Retail.

The company needs new ownership to survive, he said, and Shein can provide that financial stability.

Saunders said Shein could also establish a presence outside of fast fashion through Everlane, as it becomes difficult to grow in the industry.

Shein also has the opportunity to redefine its brand by creating a portfolio of environmentally friendly brands like Everlane, Winder said.

But analysts noted that Everlane and Shein were an odd couple.

Saunders said it was unlikely Shein would completely restructure Everlane’s supply network, but even being associated with the Shein group could be “a bit jarring for core Everlane customers.”

“Ultimately, the deal will probably save Everlane,” he said.

“But this salvation comes with a price.”

In his note, Chang appeared to address some of the negative reaction on social media as rumors of the deal circulated, saying “last week was a difficult week. It was painful to see our company in the media and in that light.”