Everlane, Shein and the Decline of Millennial Optimism

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1:42Bloomberg Audio Studios. Podcasts. Radio. News. I love the fit, the comfort. Basic style, good quality. You might know the clothing company Everlane for its plain tees, sensible work pants, millennial cool basics. Or you might know it more by reputation. The brand's marketing has always touted its commitment to quality, sustainability, and to transparent pricing. These days, Everlane isn't the retail darling it once was. It's laden with debt and struggling to connect with customers the way it did in the mid-2010s. But outside the company's store in Lower Manhattan in early June, customers told us Everlane's stated values are a big part of the reason they've kept shopping there.

2:30They mostly use pretty good material that it will last. They're branded as, you know, radically sustainable, and they're also transparent about where they source their clothes from. But that last customer, Anupriya Agarwal, said she might reconsider shopping at Everlane. When I found out that it's been acquired by Shein, which is like this mega fast fashion brand outlet, it was very appalling to me. Shein, the e-commerce giant founded in China, bought Everlane last month from its private equity owner. The sale price? A reported$100 million. Shein is a king of fast fashion. As of 2022, it released about a thousand new women's clothing styles every day.

3:16leading to concerns that its clothes aren't just fast fashion, but low quality and disposable. In addition to its environmental impact, the company has also come under scrutiny for the labor conditions of its suppliers. In some ways, Sheehan seemed like the anti-Everlane. I just have questions around why they decided to sell to Sheehan. It just doesn't align value-wise, you know. Many other Everlane customers had a similar reaction. Wake up, babe. Everlane apparently is selling to Shein for$100 million. This is my last straw. What do you mean one of the most controversial fast fashion brands is acquiring, allegedly, a brand that's a leader in ethical, sustainable modern consumerism?

4:04The internet seemed to echo with, wait, what? It was in some ways great to know that that many people cared. That's Michael Praseman, who co-founded Everlane back in 2011. He stepped down as CEO in 2021 and left the company's board in January 2026. When he heard about the sale, he called up another former board member. I don't think either of us expected that kind of a reaction because in many ways, Everlane had lost its way in the past few years. Even if you don't really shop there anymore, like what probably stays with you from Everlane as a brand is the fact that they did have this sort of like ethical consumer ethos.

4:44Amanda Mull is a reporter for Bloomberg Businessweek. And people who sort of took that at face value or even people who were like mildly skeptical of it were shocked that Everlane, that the people in charge of it would say, all right, we're going to sell this to the highest bidder, even if the highest bidder is sort of the opposite of the original Everlane promise.

5:10I'm Sarah Holder, and this is The Big Take from Bloomberg News. Today on the show, Everlane, Sheehan, and why retail can't bank on millennial optimism anymore.

5:27Everlane launched in San Francisco in the 2010s, during the early days of a direct-to-consumer boom. And Bloomberg's Amanda Mull says right away it found its audience. It designed clothes that were very much targeting like a young white collar woman who like cared about the stuff she bought and wanted high quality basics in like a sort of design forward, well considered type of style. Yeah, it felt like a very millennial brand. I was living in San Francisco and there was one right on Valencia Street. And I would always like wander into the very stark, basic, white building. Yeah, sort of like the aesthetic was somewhat like Apple Store for clothing.

6:10But when it launched, Everlane wasn't a brick and mortar store. It was a website built around an idea. It was the Obama era. You know, it was after the Great Recession. You had millennials as a huge consumer generation coming into the workplace, sort of starting to grow up a little bit into adulthood. And you have like a generation of idealistic young people who were looking to express their values however it was possible. Everlane saw this generation and went, we could tell them how clothes are made. We could help them feel good about the choices they're making. Everlane's co-founder, Michael Praiseman, says the goal was to be more open about how clothing moved through supply chains and what that actually costs.

6:54We started with a t-shirt and then grew into a full array of product and then moved from pricing transparency to factories and transparency to sustainability. Often there was like a little picture of workers theoretically at those factories on the website. This sweater was from a factory in China. This pair of shoes was from a factory in Vietnam. It was an innovative approach at the time. And for a while, it worked. So well that the company expanded into retail stores with that Apple Store for Clothing vibe. So what changed? What brought Everlane to the point where it sold itself to Sheehan? Well, I think the first issue you have is the pandemic.

7:32So you had a population, especially among Everlane's target market, which is people who work laptop jobs, people who do knowledge work, people who could work from home and did not need office clothes anymore. And that's really what Everlane was known for, is like a nice pair of clothes that you could go to the office. You could go to lunch. They did not really emphasize, like, comfortable things to wear at home in leisure time. So like a lot of other apparel brands, their sales just really had a difficult time. The second issue, beyond the types of products they were selling, was consumer behavior.

8:04Shoppers became more price sensitive and maybe more cynical. People become, you know, sort of disillusioned of the ethical consumer idea because people, I think some of them, especially people in this demographic, learn more about how the apparel industry actually works and get sort of sick of trying to mediate the risks and the downsides of it themselves. Everlane made several attempts to turn things around. In 2020, the company took on a private equity investor backed by French luxury fashion house LVMH and took out loans meant to help the company grow. There were also leadership changes, including Praseman's departure.

8:45But as Everlane floundered, another retail model was on the rise. It's easy to see the allure of fast fashion. You may have heard of Shein. It is an online fast fashion brand known for its trendy styles and its cheap prices. Shein is built on not necessarily like ideas or design, but on logistics. It is a company built by looking at where there might be inefficiencies in the traditional way that fashion is sold to create margin where there hadn't been before, while also lowering prices in a way that hadn't been possible before. So you get a company that, like, is not going to tell you much about where its clothing is made, where each design was made, that, you know, uploads to its website, like, on some days, thousands of new pieces that you can shop from that have no one particular design ethos, no one particular brand ethos, except cheap and fast.

9:40Shein has faced allegations of using forced labor in its supply chain and has been sued for copyright infringement. A spokesperson for Sheehan told us that the company complies with the relevant laws and regulations in each market we operate in. In response to allegations of copyright infringement, the spokesperson said the company takes all claims of infringement seriously. When Sheehan came onto the scene, I think I was even quoted saying that, in my opinion, their products were way too cheap and there was way too many of them. Everlane co-founder Michael Praseman. And it was not conducive to the environment, but not just the environment in general, just waste and overconsumption.

10:21So you had kind of a negative impression of Sheehan. I have a negative impression of Sheehan, so I would continue to stay there. So by early 2026, you have a debt-burdened Everlane that's limping along, struggling to connect with customers, and fast-fashion giant Sheehan pumping cheap clothes into the global market. They seemed worlds apart until they came together. So what does Sheehan want with Everlane? And how does this sale fit into the bigger picture for other direct-to-consumer brands, from Allbirds to Quince? That's coming up.

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12:22By 2026, Everlane's value had plummeted. Meanwhile, Sheehan was doing well, despite facing a slew of controversies and taking a hit from changes to U.S. tariff policy. Last November, Sheehan told investors it was expecting to bring in$2 billion in net income in 2025, almost double what it did in 2024. So the big fish swallowed the smaller fish. In late May, Everlane confirmed it would be bought by Sheehan. What made Everlane attractive to Sheehan? Why did Shein want to buy this struggling company? My theory is that Shein has been looking at the sort of meteoric growth of a brand we haven't mentioned yet, which is Quince, and said we would like to apply the Shein logistics structure to a brand that already appeals to like a higher income, more materials conscious customer.

13:18And their options were basically to try to launch a brand of their own or they could try to buy one that already has a name recognition and a customer base. And so I think that they are looking at Everlane potentially as like a sort of quick and dirty way to spin up a competitor for Quince. Quince started selling inexpensive luxury fare in 2019. They're known for products like a$50 cashmere sweater, but they've expanded to sell bedding, luggage, and even jewelry with lab-grown diamonds. And just like Everlane, Quince includes information on its factories and sustainability efforts right on its website.

14:00It's an American company, but like Shein, its supply chain is global. The big thing about Shein is that it doesn't really have many U.S. logistics nodes. One of the big differences in Sheehan's model is that they warehouse pretty much everything they sell overseas. And then when a customer orders it, they're ordering something very inexpensive. They're getting it shipped for free and they're going to wait a little bit for it. So it's sort of like they took the opposite track as Amazon. They went, if you are getting, you know, a pair of jeans for nine dollars and you can buy them in every color and wear them until the end of the season and then get whatever's trendy next year, then like maybe you're fine waiting a week or 10 days for that.

14:39And they were right. Quince uses a similar approach. When you order something from Quince, it'll ship to you directly from Asia. They don't stockpile a bunch of products in a U.S. warehouse. And like Sheehan, Quince works very hard to figure out what customers want and to produce it quickly. They are a huge data scraper. They scrape a lot of data about what people are buying and what people are looking for at other clothing websites online. And they use that to respond in like a very targeted way to new trends or new consumer desires. They can respond to trends in like a matter of a few weeks instead of it being like a 6 to 18 month thing that a clothing brand has to bet on.

15:16But Quince is different from Shein in big ways, too. They use a lot of natural fibers. They use organic cotton. They use European linen. They use real leather, things like that. Shein has come under a lot of fire for making like crap, for making stuff that is like essentially garbage. That's how people talk about these clothes. Sheehan has also been criticized for using a lot of polyester, a form of plastic, the vast majority of which ends up incinerated or in landfills. A company spokesperson told us Sheehan prioritizes its product quality and that by producing products on demand instead of en masse, it reduces waste.

15:55So is Sheehan's plan to take its supply chain tech company model and apply it to Everlane to make Everlane more like Quince? This is my guess. We don't have information on this yet. Shein hasn't said exactly what they're going to do with it. But I think that this is sort of the obvious first stop for this acquisition. Because Quince has been enormously popular. They did a recent round of venture funding that valued the company at$10 billion, which is almost double what they were a year ago. They are bringing online new product categories all the time. They make furniture now. Well, in my chat with executives there, it seems like they think that this logistic system that Quince has is applicable to all types of product categories.

16:40Like, you know, if we can define what a consumer wants and we can find a supplier that can work with us on a high volume, low price model and then get materials at high volume and low prices as well, then we can make whatever people want. And setting up that kind of logistic system is really, really difficult. It is a very, like, large-scale, multi-vendor endeavor. And Sheehan already has those relationships. It has those logistics channels. It is, in many ways, you know, a matter of just giving them different materials and different designs to make. But even if Sheehan tries to replicate Quince's model, competing with the company's success will be harder.

17:16Michael Praisman told us what he learned from Everlane was that it's a hard moment to be a mid-priced brand. Ultra-wealthy spenders want a more premium product, while everyday consumers are tightening their belts. The so-called K-shaped economy is also showing up in retail. What that means is you can end up with either fast fashion or sort of niche-slash-luxury brands. And beyond that, he says, today's consumers aren't willing to choose one brand over another based on ethics alone. I've heard people theorize that this is sort of like maybe not the end, but another nail in the coffin of the era of like millennial optimism and the idea that like you as a consumer through your choices could like make a real difference in the world.

18:01I think that people are right to look at this and go, what has happened to Everlane, at least in part, disproves the notion that people care like that much about all of these things or at least care in a way that makes them willing to pay more for something. If there's one thing about the American consumer, they don't want to buy less. Like, that is their revealed preference in every bit of data we have, is that people want to find a way to continue buying discretionary items, if at all possible. Sheehan declined to comment on its plans for Everlane. When we reached out to Everlane to ask about the sale, the company sent a statement from its current CEO that said Everlane will, quote,

18:50Amida, is that going to be possible under Sheehan? I mean, I think it would be possible if Sheehan wanted to let them. But, like, I don't understand why Sheehan would buy the company if they were intending not to apply many of the elements of their logistic system to the company. The value that Shein can bring to apparel branding is efficiency, is a supply chain that cuts out every ounce of extra fat. Everlane is just the latest direct-to-consumer company to struggle. In April, the sneaker brand Allbirds announced that it was on the brink of bankruptcy and would pivot from shoes to AI infrastructure.

19:29Casper Sleep, the mattress startup with all the subway ads, was bought by a polyurethane foam manufacturer in 2024. So I wanted to know whether Amanda viewed Everlane's sale as a sign that the direct-to-consumer model is broken. I hate to give a cliched answer, but it all sort of goes back to business fundamentals. Like if you have a company that like understands its customer, understands its appeal to its customer, understands like how that can be applied to like new types of products or new initiatives, then like there's no reason that these companies can't be solid companies. Warby Parker found like a real inefficiency in the market for prescription glasses, which is that Ellisoral Exotica basically owned the entire market and they undercut that quasi-monopoly and continue to design new types of glasses.

20:16And they do retail stores so you can try them on. People get new glasses every year, every two years. They come in, they order contacts. Warby Parker does eye exams now. They give people a reason to keep coming back. Right, right. This is why the mattress startups had a really, really hard time after launch, because people buy a mattress once every 10 years. So if you're like making the right kind of product and you understand your customer and you're making something that they want to come back and keep buying more of and they have a reason to, then there's no reason that these companies can't continue to thrive.

20:44As for Michael Praseman, he's taking another swing at it, starting a new apparel company that he says will have the same principles, but a new take. And when it was started, Everlane was a mission-driven company. And I think this is also the challenge of bringing in venture capital and private equity into a mission-driven company is because ultimately they do have an exit date. Once you bring on capital, you have to be somewhat a steward of that capital. And so now you're managing both capital and mission. And those two can be in conflict with each other, no doubt.

21:19This is The Big Take from Bloomberg News. I'm Sarah Holder. The show is hosted by me, David Gura, and Juan Ha. The show is made by Aaron Edwards, David Fox, Jeff Grocott, Patty Hirsch, Rachel Lewis-Kriske, Emma Munger, Lauren Newcomb, Naomi Ng, Julia Press, Tracy Samuelson, Naomi Shaven, Alex Ugiura, Julia Weaver, Yong Yong, and Taka Yasuzawa. Our executive producer is Nicole Beamsterborg. To get more from The Big Take and unlimited access to all of Bloomberg.com, subscribe today at Bloomberg.com slash podcast offer. Thanks for listening. We'll be back on Monday.

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