How Reformation’s CEO expanded the trendy brand beyond dresses to achieve ‘double-digit’ profitability

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- Dress for success. Reformation CEO Hali Borenstein is leading the 15-year-old apparel company through its adolescence. The period can be awkward for brands—especially those that came of age in the direct-to-consumer era, like Reformation—but Borenstein says an early focus on profitability is helping the sustainability-minded retailer thrive.

Borenstein joined me onstage at the National Retail Federation's Big Show in New York last week for a conversation about what adolescence is like for the trendy and sustainable—but no longer new—brand.

Reformation's age places it squarely in the 2010s direct-to-consumer generation of brands that grew quickly—some of which have since flamed out. Borenstein, a Reformation veteran who's been CEO since 2020, says the company has emerged from that era in a strong place, thanks to a focus on profitability dating back to 2016. The brand with more than $350 million in revenue is known for a commitment to environmental sustainability, which influenced its business practices. Borenstein says it has "double-digit profits." Fifty-six percent of people who walk into a Reformation dressing room buy something, she says.

"When we set out to bring sustainable fashion to everyone, part of that was recognizing we had to be profitable," Boreinstein told me. "We needed to build not only a sustainable business but a business that can fund itself and its expansion. Today, that's part of the zeitgeist, but it certainly wasn't five years ago. That's really helped us weather the storms of the last couple years."

Reformation has passed up on some opportunities to grow faster. "There was always a conversation—what would happen if we spent more on marketing?" Borenstein says. During the early pandemic, the company chose not to make a quick pivot to athleisure—and much-needed profit—because the available fabric wasn't up to its sustainability standards.

Instead, Borenstein has steered slower growth through category and geographical expansion. For years, Reformation was best known as a place to buy dresses (often worn to attend weddings). In 2019, about 65% of product the brand sold was dresses; today, it's expanded into sweaters, denim, and more. Dresses now make up about 35% of sales. International expansion is the next major opportunity.

While Reformation has been rumored to be pursuing an IPO, Borenstein says "there's nothing to report." Yet "at some point, [the brand's growth] will obviously translate to value for shareholders," she says.

Emma Hinchliffe
emma.hinchliffe@fortune.com
@_emmahinchliffe

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