How Reformation sticks to its mission and stays ahead of the pack

Reformation is a direct-to-consumer sustainable fashion brand that “makes killer clothing without killing the environment,” according to CEO Hali Borenstein.

Reformation launched in 2009, during the explosion of direct-to-consumer brands and ecommerce growth. But its focus on bringing sustainable fashion to everyone while maintaining profitability has allowed Reformation to endure and grow, even as other DTC brands have fallen by the wayside.

“That’s actually a key differentiator from what was kind of going on in the heyday of D-to-C,” Borenstein said during a fireside CEO chat with Fortune Senior Writer Emma Hinchliffe at NRF 2024: Retail’s Big Show.

Reformation has been profitable every year since 2016, reaching $350 million in 2023. “A true core value for us is that we needed to build not only a sustainable business but a business that can fund itself and its expansion,” Borenstein said. “Today, that’s part of the zeitgeist, but it certainly wasn’t five years ago.”

Finding ways to align mission with profit has allowed Reformation to weather the storms of the past few years, including COVID and supply chain disruptions. “That discipline in decision-making and that focus was really important,” Borenstein said. “And for me personally, I aspire to demonstrate that you can be a sustainable, high-growth business and be profitable.”

Redefining manufacturing standards

When Reformation first launched, quality sustainable fashion was a fairly revolutionary concept.

“What’s interesting about Ref is, because sustainability was at the core of what we did from day one, we had the opportunity to redefine what our standards were and how we make things and how we make product,” Borenstein said.

“This idea of making something faster doesn’t necessarily mean it has to be poor quality or done with a certain type of labor. You can still have incredibly high standards for how your manufacturing is done, what materials you use. You just have to be a lot more thoughtful from day one and build that out.”

Sticking to its mission does mean that Reformation has missed out on some opportunities, Borenstein said. For example, the company was originally known for its dresses, particularly for special occasions; in 2019, 60%-65% of sales were dresses.

But when COVID hit, there was less need for occasion wear and dresses. As the world turned to athleisure, brand leaders thought Reformation should get into that space. But no existing fabric on the market met the brand’s sustainability standards; the only fabric that did meet those standards wouldn’t be ready for nine months. Ultimately, the team chose to wait for the more sustainable fabric option, missing out on nine months of athleisure wear revenue.

In another example, Reformation launched its first shoe line in 2019 with a third-party partner. When the company’s need for speed and a test-and-learn operating model did not work well with the partner, it shut down the shoe business in April 2020, brought in a new team and built a shoe line from scratch. That included finding components and factories that could meet the brand’s sustainability and transparency standards — not an easy task for an article of clothing that contains more than 20 different components and associated supply chains, Bornstein noted. In April 2021, the Reformation shoe line relaunched and has been much more successful than the original iteration, she said.

Having that core mission in place and sticking with it can ultimately make decisions much easier, Borenstein said. “You do have to make decisions at times where it’s not about business. You have to put your mission first,” she said, while noting it is much more challenging for brands that later try to pivot into sustainability to make those tradeoffs and stand by their decisions.

The future of the brand

For the first decade in business, Reformation was focused on building out the core business model: making products that customers feel good about buying and creating a unique brand voice, Bornstein said.

The next phase is taking that core and expanding upon it with the operating model Borenstein’s team has put in place to reach new audiences and consumers, which includes Generation Z.

“What we’ve seen is that they aren’t that much different than every other consumer that we’ve seen in our past. They’re still looking for great product that make them feel good,” she said. “They identify with brands that have a voice and stand for something, and so by staying true to those core tenets we’ve established over the last 10-15 years, we’ve really been able to attract a Gen Z audience.”

“We’re just focusing on staying true to what we’ve built in the last 15 years.”

Hali Bornstein, CEO, Reformation

What is different is how Reformation is reaching that audience, she said; while Gen Z is, of course, on TikTok, they are also looking for more in-person interactions and like to go to one of the brand’s 40 bricks-and-mortar locations.

Now entering its 15th year of business, Reformation is no longer the hot young thing but not yet a legacy brand, Hinchliffe pointed out. But Reformation isn’t fazed by new sustainable fashion competitors, Borenstein said. Rather, her team is homing in on the brand’s core: refining the product model and leaning into its fast, agile supply chain, all of which took time to get just right. “We’re just focusing on staying true to what we’ve built in the last 15 years,” she said.