Background: Everlane launched in 2011 with a promise of "radical transparency," becoming one of the early pioneers of sustainable and ethically produced fashion. All this helped it become one of the most popular direct-to-consumer brands of the early 2010s. In 2020, private equity firm L Catterton led a Series F round for Everlane, investing $85 million into the business at a valuation of $550 million

What happened: Now, Everlane has been sold to Shein for just $100 million... a significant drop from its previous valuation. The sale price also comes only slightly above Everlane's last major funding round in 2022, when the company raised around $90 million in debt financing.  

What else: The acquisition is not sitting well with customers. Shein has been called the single biggest polluter in fast fashion. And since the deal was made, Everlane's social media accounts have been flooded with angry comments because this acquisition doesn't really align with Everlane's values.

What's the key learning?

💡Values-led brands can lose customers quickly when business decisions contradict the identity they've built. Selling an "ethical" brand to a company criticised for its fast-fashion pollution and unsafe working conditions, damages the trust built with customers buying from Everlane for ethical reasons.

💡 Customer trust is often tied as much to brand identity as it is to the product itself. When a company's actions clash with what consumers believe the brand stands for, it can quickly hurt the brands reputation.

💡 For example, Volkswagen marketed its cars as eco-friendly but was found to have installed software to manipulate emissions tests. The fallout caused a 25% drop in customer loyalty and more than €31 billion in estimated costs. So it's a big reminder of how quickly customer loyalty can unravel when actions conflict with a brand promise.