California Apparel News

After a little more than a year after opening its first store, Portland, Ore.–based outdoor-apparel maker Nau is closing.

The company, founded by former Nike, Patagonia and Adidas executives, set out in 2005 to create a new concept for retailing and manufacturing. Although the company had raised $35 million since its launch, Nau’s current round of financing fell short, said Ian Yolles, Nau’s vice president of marketing.

“We knew we had to raise another round of funding this year, and we knew we had to close it essentially by the end of April,” Yolles said, adding that Nau had secured some funding from its current investors but needed additional financing to continue.

“There was a gap between the amount from the current investors and what we needed, so we had been out in the market looking for some additional financing. We were not able to close up the gap, and therefore we were not able to close the round of funding. We have no choice but to wind up the operations of the company.”

Although the company has shuttered its stores and is selling its inventory, Yolles held out the possibility for the company to continue. An industry insider could purchase the existing assets of the company, Yolles said, but he added, “Someone would have to express their interest pretty quickly.”

“Personally, I think there’s an enormous opportunity for somebody,” he said. “You could come in and pick up the key assets at a fraction of the cost. I think it represents a significant opportunity for someone who could wrap their hands around it quickly.”

On a sustainable mission

The company mission was lofty but simple: to make clothing that embraces three qualities, beauty, performance and sustainability. To put that mission into practice, the founders redefined each process of design and production. The fabrics and trim were chosen from sustainable, recycled or organic materials. When performance criteria dictated that man-made fabrics be used, Nau sought to offset the negative aspects of the material by reducing its carbon footprint or shortening the supply chain.

For the design of the collection, Nau blended the three criteria by offering apparel for men and women that were equal parts performance and fashion. Nau’s coats, jackets, pants, dresses and shirts had a sleek, minimalist look. Performance details such as hoods and zippered pockets were cleverly hidden to allow items to travel from rugged outdoor terrain to the daily life.

And the sustainable message extended to the retail stores that carried the full collection but no back stock. Customers were encouraged to try on garments in the store. When they made a selection, they were directed to the company’s Web site, where they placed an order for home delivery. The unorthodox practice was conceived to cut down on carbon emissions from trucking the garments from the distribution center to the store. It also limited the need to carry extensive inventory and allows Nau to run smaller, more energy-efficient stores.

Nau’s founders started working on the company concept in February 2005 and opened the first Nau store in early 2007. The company quickly opened stores in Portland; Boulder, Colo.; Seattle; Chicago; and Los Angeles, with plans to open up to 10 more this year. All the Nau stores have been closed, and the remaining inventory is being sold at a discount on its Web site (www.nau.com).

The end was unexpected. The company had hosted an opening party for its Los Angeles store at the Beverly Center on April 30. A documentary about the company appeared on the Sundance Channel on May 6. And a feature on the company had just appeared in Fortune. “The outpouring of response has been overwhelming,” Yolles said. “If you look at our blog and what people are saying, it really is heartbreaking.” —Alison A. Nieder