Ssense: What Went Wrong

After Donald Trump was re-elected as US president in November, Ssense’s co-founder and chief executive, Rami Atallah, told employees on Slack not to panic about the political leader’s threats to raise tariffs, according to a person with direct knowledge of the matter.

This week, Atallah sent a different message. In an email obtained by The Business of Fashion, he told employees that Ssense would be filing for Canada’s equivalent of bankruptcy protection within 24 hours, and that the e-tailer’s lenders had already filed with the Superior Court of Québec, where Ssense is based, to force a sale of the company.

Atallah went on to lay the blame for Ssense’s predicament squarely on the Trump administration’s trade policy. Canada was among the first countries targeted with tariffs after Trump took office, and the current 25 percent levy is among the world’s highest. That already threatened to push Ssense’s business over the edge: The company primarily ships its orders out of its own warehouse in Montréal, and 60 percent of its business comes from customers in the US, according to a former employee. A final blow is due to land on Friday, when shipments valued at under $800, previously exempt from tariffs, are scheduled to face the same 25 percent rate at the US border.

The tariffs, along with the lenders’ filing, “created an immediate liquidity crisis no short-term fix could solve,” Atallah wrote. “After exploring every refinancing and strategic option, we concluded that restructuring … is the only path for us to continue operating.”

This week’s events are a major blow to a company that was a trendsetter in online luxury fashion. In the last decade, Ssense solidified its status as the go-to online retailer for fashion-forward luxury consumers with its coterie of cutting-edge indie designers and attractive discounts. At its peak, the company generated north of $800 million in annual sales, while claiming to be profitable, according to a former employee. In 2021, Ssense sold a minority stake to Sequoia Capital at a valuation of more than $4 billion. Even as rivals such as Matches Fashion, Farfetch and Net-a-Porter were sold or shut down, Ssense seemed to be one of the survivors.

But in the past year, Ssense hit a wall: Sales to the US, which had more than tripled between 2019 and 2023, plunged 28 percent last year, according to credit card transaction data from Consumer Edge. (Ssense disputes this data but declined to provide sales figures). The site’s markdowns, once associated with wildly popular sales events, became ubiquitous. It was also racking up losses, according to several former employees.

Before this week, the company was taking other steps to shore up its financial position. In May, it laid off more than 100 employees across departments and instituted hiring and promotion freezes, citing tariff uncertainty, according to two former employees.

Ssense’s problems have only continued to mount, however. It has struggled to sell through inventory and has deferred payments to vendors amid cash troubles.

Ssense is far from the only luxury retailer with these issues. Earlier this year, Saks Global told vendors complaining of late or missing payments that they would not be made whole until deep into 2026. Earlier this month, Italy’s LuisaViaRoma filed for bankruptcy protection, listing over 1,250 creditors.

But some challenges were unique to Ssense, according to former employees. They pointed to Atallah’s unwillingness to branch out from the company’s historic focus on young consumers, even as it became clear this cohort had exhausted the spending power it had displayed during the “revenge shopping” phase of the pandemic. The company held off on hiring more personal shoppers, key to drawing big-spending customers who are more willing to pay full price, and deprioritised its brand incubation programme which would have kept its assortment fresh, some former employees said.

“Much of their brand vibe and corporate strategy is very dictatorial. It felt like you weren’t allowed to say anything,” said AJ Lacouette, who worked in marketing and editorial content at Ssense from 2022 to 2024. “Feedback needs to become a huge part of Ssense’s core — from customers to employees. They love surveys but that was just a pacifier. They need to learn how to open that dialogue.”

Losing Its Edge

Founded as a college thesis project, Atallah worked with his brothers, Firas and Bassel, to open a boutique in Montréal in 2004 and launched online in 2006, carrying mainstream premium brands like Juicy Couture and 7 For All Mankind.

By 2009, Ssense’s assortment mixed luxury labels like Prada with mass brands like Adidas. In the mid-2010s, the vision of going after younger, more streetwear-driven consumers, and leaving more mainstream luxury customers to Net-a-Porter, Matches and Farfetch, took shape. Ssense developed a reputation for carrying the best selection from hot independent brands, such as Wooyoungmi, Casey Casey and Juun.j. To burnish that reputation, it regularly turned over its homepage to articles showcasing emerging designers and brands that wouldn’t have been out of place in an indie fashion magazine.

The point of it all was to differentiate Ssense from a crowded field of e-commerce sites selling the same products from Gucci or Dior. Investors took note. In 2021, Ssense had secured a minority investment from venture capital firm Sequoia at a $4.1 billion valuation. That year its sales in the US grew 50 percent, according to US debit and credit card data from Consumer Edge.

But Ssense has increasingly relied on discounts for growth. Last year, the company added an “all sales” button on its product feed where users can find year-round discounts on goods from coveted indie brands like Lemaire and Jacquemus, a move that fed the company’s “discounting drug” amid a drop-off in revenue, according to a person with direct knowledge of the matter.

Two former employees described Ssense’s independent designer angle as a way of saving face as luxury giants like Dior were leaving the platform, as well as other discount-happy online retailers, in favour of their own channels. When you find products from large brands like Prada and Saint Laurent on Ssense today, it’s often in categories such as eyewear.

Management Misfires

Atallah, who shook up online shopping with controversial moves like acquiring digital fashion community and search engine Polyvore in 2018 after it had already ceased operations, has become decidedly risk-averse in recent years, according to former employees.

Part of that stems from the structure of the company’s board, which consists of Atallah and his brothers and a small stake from Sequoia Capital, according to a person familiar with the matter. Atallah is the final decision maker across departments from merchandising to editorial and backend operations, the person said.

New strategies are often mulled over for months during multiple meetings, only to never come to pass, said three former employees. For example, last year Ssense had meetings about growing its team of more than 25 personal shoppers, but ultimately decided against it, according to a person with direct knowledge of the matter.

Ssense has also pulled back investments in its brand incubator programme — where it covers design, production and personnel costs — which has produced brands like the short-lived Random Identities and now Lu’u Dan, Still Kelly and I’m Sorry by Petra Collins, according to three former employees. Its aim was to help keep Ssense’s assortment fresh and maintain its reputation as a champion for emerging designers, but it was also an expensive investment, one of the people said.

The recent lack of momentum had led to internal rumblings about underlying cash flow troubles well before this week’s bankruptcy filing. There had long been a lack of transparency around the company’s financial health, three people said. During all-hands meetings, company leaders typically discuss growth percentages, not full sales and profit figures. Some company employees didn’t know that Ssense had taken financing from the Québec government until it was published in an article on the tech newsite The Logic last February. Outside of the Atallah family, even senior leaders were unaware of the extent of Ssense’s cash flow issues, the people added.

Before the bankruptcy filing, the most salient evidence of Ssense’s cash woes came as designers began to complain to current and former staffers about not receiving payments. That also became an issue for Ssense’s partnerships team since prospective brand partners were complaining about not getting paid, another former employee said, threatening another revenue stream.

Survival Tactics

Ssense remains an important retailer for independent designers that push aesthetic boundaries and appeal to aspirational, Gen-Z luxury shoppers. The company still elicits strong emotions from consumers: Comments under BoF’s Instagram post about the bankruptcy filing range from “save Ssense at all cost!” to “next sale is gonna hit differently.”

Atallah told employees on Thursday that the company will continue normal operations and pay salaries and benefits until further notice.

“We are here today because the rules of the game have changed,” Atallah said in the memo. “What happens next depends on the ruling of the CCAA proceedings, but our determination is unwavering. Now, more than ever, we need focus and commitment.”

But how Ssense moves forward from this critical moment is unclear. Before its bankruptcy filing, the company told employees it was installing an executive in the US to create a go-to-market strategy that may include opening a warehouse or store there, according to two former employees. But that likely hangs in the balance as Ssense fights off a sale.

Even if the company can successfully fend off creditors and mitigate the impact of tariffs, it still needs to update its formula of using constant markdowns to appeal to Gen-Z consumers. What that looks like is unclear. Mytheresa, by far the most successful luxury e-tailer today, focusses on serving a high-earning clientele with a tightly curated edit, personal shopping and lavish events. But Ssense would struggle to emulate this and maintain its distinction as a cutting edge retailer, said Mario Ortelli, managing partner at luxury advisory firm Ortelli & Co.

“It’s not an easy one to try to find the new trends that are coming to the market, and being able to have the right assortment creation to build that relationship with your customer,” Ortelli said. “They rode a wave that is not there anymore. You have to find a new proposition.”

Editor’s Note: This article was updated on 29 August to add in Ssense’s dispute over US transaction data.