Saturday, 3 May 2008
"Goodbye for Nau"
The much vaunted Portland based eco sportswear company is closing down.
Showing panache to the last, their website today carried the headline: GOODBYE FOR NAU
It's such a sign of the times story... in case they don't keep it online here, this for future reference is what they had to say:
"In the current highly risk averse capital market we simply could not raise the necessary funds to continue to move forwards. We believe this is not so much a reflection of the viability of our business, but the result of an unfortunate confluence of events. Just as we could not have predicted the sudden groundswell of environmental consciousness that blossomed at the time we launched our business, we did not foresee the current crisis in the capital markets. At this time investors are loathe to invest in anything; especially it appears, a company like Nau that has the audacity to challenge conventional paradigms of what a business should be like."
A story in the Portland Business Journal notes:
"All five Nau stores will shut down: Bridgeport Village in Portland, and stores in Bellevue, Wash., Chicago, Boulder, Colo., and Los Angeles. The latter store opened just last month. Ninety-five people will lose their jobs. Though the closure seems sudden, the Portland-based sustainable clothing company has been struggling for a year. Nau executives told the Business Journal last July that they were scaling back expansion plans and tweaking their clothing mix. Nau executives have never released revenue figures. Nau had built a unique retail business based on sustainable products and operations combined with a charitable giving program that dedicated 5 percent of each sale to charity. Company bylaws prohibited any Nau executive from earning more than 12 times what the lowest-paid U.S. worker earned. The clothing also had no logo."
Only June last year, this was being tipped as a brand to watch: eg this in Fast Company magazine. "Today, Nau is a business with three months of sales under its belt by way of the Web and four retail stores (in Boulder, Colorado; Portland; Chicago; and Bellevue, Washington), 92 people, $24 million raised in capital, and four clothing collections in various stages of production. The business plan projects $11 million in revenue this year, growing to $260 million and 150 stores by 2010." But it's the ideals that were more impressive: "We believed every single operational element in our business was an opportunity to turn traditional business notions inside out, integrating environmental, social, and economic factors. Nau represents a new form of activism: business activism."
I'd like to say brilliantly well done to Eric Reynolds, Chris Van Dyke and the team for trying something like this - if it's any consolation you have still created a shining example for others to follow, and many if not most attempts to do something groundbreaking do fail. It's such bad luck to have been caught out so early on. Also you never know what the future will bring, any one of the near hundred staff may now be about to try something even more world changing based upon the experience and the lessons and sheer sense of possibility gained from Nau. Still it must be bitterly disappointing & I am sure everyone reading this will be feeling for you. As the saying goes, "we grieve with you".
This may also prove to be something of a Bear Sterns style warning to the whole green consumerism (eco luxury) end of things. Wherever 'green is the new' black supported the model, or more starkly where the goods required people to pay more for green and/or the purchase was rather discretionary, then it will probably be a tough year. Especially as in this case if you need injections of capital or have any cash flow issues. But not to panic, for instance if you sell to a dark green niche, then they are hardly going back to buying crap versions of what you do. And with change, provided it isn't fatal, there are often opportunities to innovate too. Howies met a near fatal moment early on when they moved to organic cotton and most of their wholesaler/trade customers dropped them because it was "too pricey" - but this was the stimulus for them to launch their own catalogue, now the mainstay of the business.
And also perhaps even a valuable lesson; can we build tomorrow's social ventures relying on capitalist investors (rather than for instance community/co-operative/co-ownership models)? For all the stuff about justifying their rewards based on an appetite for risk, the evidence of the majority of major investors I have ever seen close up is that they are a force for conservatism when times are good (always pushing for the easiest buck) and pull the plug at the first sign of trouble. Whenever there is an investor the business is geared to maximise profit, rather than a mixed yield of community 'goods'.