Why Was Everlane Evicted the Same Year It Sold for $100 Million?

Situation

A handful of my clients have built their businesses marketing heavily on social media, mostly Instagram, over the last several years. Through some of those relationships, I got to know a few leaders in that ecosystem, women who were being called influencers at the time, before content creator was the term anyone used. A couple of them had valuable relationships with Everlane. I knew the clothing well because of it, but what I remember most is how selective those women were about who they worked with. They turned down more partnerships than they accepted, and Everlane was one of the few that made the cut.

That kind of caution is worth remembering, because it is not how the company's story ends. In March 2026, a landlord in San Francisco filed to evict Everlane from its second-floor offices at 2150 Folsom Street. The unpaid rent came to $51,273.40, small money for a brand that had once been valued at $600 million and was still doing an estimated $170 million a year in sales. The overdue rent mattered less for its size than for what it revealed. It was the first piece of paper about the company's finances that anyone outside Everlane could actually read.

Everlane opened in 2011 with a premise other apparel companies were not making: it would show customers exactly what its clothes cost to produce, and price them at a transparent markup. Founder Michael Preysman called it radical transparency. Customers, including a young audience that counted Meghan Markle and Angelina Jolie among its fans, responded to something that felt rare in fashion, a company willing to be examined. By 2016, that trust had built a $250 million company, and in 2020, at the height of the direct-to-consumer boom, L Catterton, the private equity firm connected to LVMH, led an $85 million funding round that valued Everlane at roughly $600 million. Preysman stepped back from day-to-day leadership not long after, staying on as executive chair while new executives took over daily operations.

What followed was a slow renegotiation of what Everlane was actually for. In January 2023, the company cut 8.6 percent of its workforce, and its CEO at the time said the expectation to turn a profit had “shifted overnight.” In 2024, a new CEO, Alfred Chang, repositioned the brand upmarket, aiming at customers who shopped Khaite and Toteme rather than the value-conscious, transparency-driven customer Everlane had built its name on. To fund that repositioning, the company took on a $25 million loan from Gordon Brothers and a $65 million asset-based credit facility, roughly $90 million in new debt sitting on top of a business that was, by its own account, only breaking even.

By May 2026, L Catterton approved the sale of its majority stake to Shein, the fast-fashion company Everlane had spent over a decade positioning itself against, for approximately $100 million, an 83 percent decline from the company's 2020 valuation. Preysman was not part of the decision. He has said he found out about the sale the same way most people did, from news reports, and that he was appalled. Somewhere in that decline, Everlane found itself cheap to find, the opposite of what had made the influencers I knew choosy about it in the first place. The eviction notice over $51,000 was the visible edge of a much larger decision, made years earlier, about what Everlane's ownership was willing to spend to become a different kind of company than the one that had earned people's trust to begin with.

Insight

What Everlane's ownership was actually deciding in 2024 was a bet that the company could out-earn its stalling growth by moving upmarket toward a customer who had never bought into radical transparency at all, and had no reason to trust the brand simply because its price tag went up.

The financial mechanism underneath that bet is straightforward. Trust is not a line item on a balance sheet, but it functions like one. Everlane's original customers found the company because the company had made itself cheap to find. Publishing its own costs meant it barely had to advertise to earn belief, and that belief lowered the cost of acquiring every new customer for years. When the company repositioned toward a wealthier, more skeptical shopper, it lost that advantage overnight. Winning a Khaite or Toteme customer meant competing on the same terms as every other premium brand, marketing spend, store experience, and price signaling, none of which Everlane's existing trust asset transferred to.

That kind of repositioning is expensive, and Everlane's own operations were not generating the cash to fund it. Estimated sales had plateaued around $170 million a year, and the company was, by its own account, breaking even, not growing. So new ownership borrowed for it instead: a $25 million term loan and a $65 million credit facility, roughly $90 million in liabilities layered onto a business with no real growth engine to service them. A healthier version of this decision would have looked almost the opposite. If gross margin was too thin among the existing customer base, the fix was to protect and deepen that base, tightening the cost structure that served them, rather than borrowing to go acquire a customer with no relationship to the brand at all.

This is also what the sale price reveals about who was actually making decisions. Once outside capital held the majority stake, transparency stopped being the operating principle and became a claim layered on top of ordinary private equity logic: grow fast, then reposition for margin, then sell. Preysman has said the venture and private equity money that funded Everlane's growth also pressured quality and supply chain decisions in ways that eventually disappointed the customers who had trusted the company first. The founding values did not disappear from the website. They simply stopped showing up in the decisions that mattered.

If you already run a business with more than one person, one location, or one offer making decisions in your name, this is exactly the calculation worth running against your own numbers. Whoever controls the money, whether that is an investor, a lender, or a silent partner, is also quietly controlling which values survive contact with a bad quarter.

Application

Protect the asset that isn't on your balance sheet. Your reputation with the clients who already trust you is the cheapest growth engine you will ever have. Before you spend money chasing a new, unfamiliar customer, ask what it would cost to simply serve your current one better. Often that number is smaller, and the return arrives faster.

Run the numbers on every offer before you reposition any of them. For each offer in your business, look at three things together: what percentage of your revenue it represents, how much time or cost it takes you to deliver, and how much of a long-term client relationship it actually builds. Everlane's ownership repositioned toward a new customer without asking whether that customer would ever generate the loyalty its original base did. Run that same math on your own offers before you change who they are for.

Know exactly who can override your decisions when the money is not entirely yours. A loan, an investor, or even a generous silent partner comes with terms, and those terms decide what happens when growth slows. Before you take money from anyone, ask what specific decisions they gain the right to make, and whether you would make the same choice they would if your numbers dipped for two quarters in a row.

A note especially for women founders: there is a specific pressure to prove your business is serious by chasing bigger clients, higher price points, or more prestigious partnerships, even when your actual strength is the trust you have already built with the people in your corner. That instinct to reach for legitimacy on someone else's terms is understandable. The trust you already have carries real value. Protect it, and price it like the asset it is.

Takeaway

The people controlling Everlane's money decided that efficiency, in the form of a wealthier customer and a slimmer cost structure, mattered more than the relevance the company had already earned with its existing customers. Those two things are not always in conflict, but when a company is forced to choose between them, chasing efficiency at the expense of an already-earned relationship rarely ends the way the spreadsheet promised.

Preysman's answer took the form of a structural rule: no venture capital, no private equity, on his newest venture. Whether that holds remains to be seen. Values only survive contact with hard numbers when the person controlling the money has the power, and the will, to protect them.

“You can borrow against almost anything except the reason people trusted you first.”

Sources & References