A popular fashion retailer built its name promising shoppers a different kind of clothing business, one that is rooted in sustainability, minimalism, and affordable luxury.
A Millennial favorite, the company made “radical transparency” its unique selling point, telling customers they had a right to know how much their clothes cost to make, from materials and labor to transportation. Established in 2010, this concept was revolutionary.
Even today, the brand says it reveals the true costs behind its products and offers them “minus the traditional retail markup.”
This made the direct-to-consumer brand a go-to for shoppers seeking simple basics, better materials, and a cleaner story about what they were wearing.
And now, in an extremely surprising move, the company is reportedly heading toward one of the most surprising buyers possible.
Shein is acquiring the U.S.-based retailer Everlane in a deal valued at roughly $100 million, according to a report from Puck News, based on confirmation from an unnamed source.
The deal has not yet been officially confirmed, and Everlane told TheStreet that it “does not have more to share at this time.” Shein did not respond to TheStreet’s request for comment.
Irony behind the reported Everlane sale to Shein
The reported deal is getting attention because Everlane and Shein represent very different sides of the fashion industry.
Everlane grew up selling the idea of better products, transparency, and sustainability, and has been open about its supply chain and pricing, despite being privately owned.
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Shein, on the other hand, is best known as an ultra-fast-fashion company, which offers a massive number of low-priced styles online. Shein’s popularity has offered insights into shifting fashion trends and consumer habits, especially among younger shoppers, while reflecting the changing landscape of retail amid social media-heavy marketing.
This contrast would make an Everlane sale more than a typical retail acquisition. It would also represent how difficult the market is becoming for brands that were once very popular and built their identity around purpose, quality, and customer loyalty.
Everlane has faced debt pressure
The reported sale plans come as Everlane struggled to regain momentum after the pandemic-era boom and the subsequent slowdown in direct-to-consumer retail.
According to Puck News’ earlier reporting, Everlane’s majority owner, private investment firm L. Catterton, and Everlane CEO Alfred Chang have been seeking investors to help manage the company’s debt.
Everlane has more than $90 million in debt, including a $65 million asset-based revolving credit line and a $25 million loan from Gordon Brothers, Modern Retail reported.
Puck also reported that common shareholders in Everlane will not receive a payout, and it remains unclear whether the preferred shareholders will be paid in cash.
Shein faces ongoing scrutiny
The reported deal also comes as Shein continues to face scrutiny from regulators, lawmakers, and consumers.
In February, Texas Attorney General Ken Paxton sued Shein, accusing the fast-fashion giant of selling toxic products to consumers and exposing sensitive personal data to the Chinese Communist Party.
The lawsuit alleges violations of the Texas Deceptive Trade Practices Act and seeks monetary relief for the state. Shein has not admitted wrongdoing in the case.
Shein is also facing a proposed class-action lawsuit in California federal court, accusing the company of using inflated reference prices to make shoppers believe they were getting bigger discounts than they actually were.
And the pressure is not limited to the U.S. In February, the European Commission opened formal proceedings against Shein under the Digital Services Act, saying it would investigate issues including the sale of illegal products, addictive design risks, and transparency around recommender systems.
“In the EU, illegal products are prohibited — whether they are on a store shelf or on an online marketplace. The Digital Services Act keeps shoppers safe, protects their well-being, and empowers them with information about the algorithms they are interacting with. We will assess whether Shein is respecting these rules and their responsibility,” said Henna Virkkunen, executive VP for Tech Sovereignty, Security, and Democracy.
These lawsuits come as Shein plans to register for an Initial Public Offering (IPO), CNBC noted. The company was initially set for a New York listing, which later shifted to London and then Hong Kong, but has been long delayed due to regulatory hurdles.
Fast fashion pressure has reshaped retail
This deal is only the surface of the pressure that fast-fashion giants are putting on the broader apparel industry.
A McKinsey study noted that the fast-fashion model is built around ultra-low prices and compressed production timelines, allowing retailers to move faster than traditional apparel companies.
The pressure has intensified with companies such as Shein. McKinsey reported that Shein was producing up to 10,000 new designs a day as of 2023, with an average SKU price of $14, compared with $26 at H&M and $34 at Zara. The report also noted that Temu and Shein have become the primary online fashion marketplaces in the U.S.
Tariffs and trade changes have added further pressure, but even they have not been able to erase the threat posed by fast fashion. Stanford Graduate School of Business research found that import duties pushed “ultra-fresh” fashion firms to adapt their supply chains and pricing models.
That is the difficult backdrop for Everlane.
A brand built on sustainability, transparency, and an intentional approach to fashion could soon sit under a company with a very different reputation. If the deal closes, it could result in a very different future for Everlane, as it reportedly becomes part of one of the most scrutinized names in global fashion.
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