Nau Is Then

The hip green clothing label with an unconventional approach to style, materials, and retailing calls it quits. What went wrong?

BusinessWeek, May 16, 2008 — When the founders of Portland (Ore.)-based Nau first came together in 2005 to lay the groundwork for a sustainable fashion company, their strict eco-principles and innovative e-tailing strategy appeared to be ideas whose time had come. Its stylishly minimal clothes in muted colors, made of sustainable materials such as organic cotton and recycled polyester, went on sale in 2007 and appealed to outdoorsy types and city dwellers, tapping into the growing green fashion trend. Nau's few bricks-and-mortar stores were eco-friendly showcases for products, but customers were encouraged to buy online with a 10% discount. And as part of the company's social enterprise initiative, 5% of all sales—from a $38 tank top to a pair of $138 "lean jeans"—were handed over to nonprofit organizations, chosen by the buyer.

All the ingredients were in place for this business," recalls Ian Yolles, vice-president for brand communications, about the startup's corporate, design, and brand philosophy. Indeed, in its first and only year of operation, Nau attracted a cult following; Even today its Web site is jammed as the company sells off remaining stock at half-price. But at a board meeting in Portland on May 1, the directors decided to shut it down, just two weeks after its L.A. store had opened.

So what went wrong?