Reformation CEO Hali Borenstein Talks About the Company’s Strategy [INTERVIEW]

Hali Borenstein wants Reformation to live up to its name. 

Already the Los Angeles-based brand has played its part as a pioneer in sustainability. 

But Borenstein — who’s been with the brand for over a decade and has served as chief executive officer since 2020 — is looking to keep the company on its own path in fashion, an industry with a peculiar ability to get caught in ruts. 

“The groupthink is insane,” claimed Borenstein during a chilly visit to New York. “The need for more independent thinking across politics, across business, across the board I think is something we’ve lost. I don’t know exactly the reason why, but just the art of conversation and debate and the ability to disagree is something we need to hone further if we’re going to get to better answers.”

To get those better answers, Borenstein said she has fostered a culture that lets employees tell her, “Respectively, you’re a moron.” (Although probably not in those words). 

“The level of rigor of debate that goes on in our organization around the strategy or an idea is different,” she said. “There’s more points of view, more willingness to challenge each other to get to a right answer for us, rather than doing what others are doing.” 

The result is a business that is doing things its own way — in its approach to sustainability and beyond. 

“The retail thing’s a good example,” Borenstein said. “People hated retail stores for years and now everyone’s dying for a retail store. It’s crazy how quickly things [change]. Malls, no one wanted a mall [store], now everyone wants to be in a mall.” 

Reformation has been steadily building in retail and now has 49 stores. The brand is also approaching brick-and-mortar with its own high-tech flair. 

When she was hired — founder Yael Aflalo found the former Bain & Co. consultant on LinkedIn — the company had just three stores. While they were “very profitable,” Borenstein said they had a “tough experience.”

“Our team only had time to find you a size or check you out, never to have a conversation,” she said. “And so we actually paused all retail development and rollout for many years as we went and built technology that would deliver a high-end, high-volume experience.”

The stores now have one of everything on display and shoppers can take three paths to the fitting room to try on their size: an associate, a digital screen on the wall or the shopper’s own phone. 

It’s an approach that both keeps the storefront from overflowing with inventory and helps the brand understand IRL shopping patterns. 

“We know 64 percent of people who walk into a fitting room buy something and we know by item that this sweater converts at 75 percent, but this sweater is 20 percent,” Borenstein said. “So we can actually upsell that item, and we can have our corporate team look into what’s wrong with this item. And so the richness of the data really provides a much more personalized experience for our team and gives us information to build a much better experience for the customer.”

Building and supporting the culture that has helped push Reformation forward has been something Borenstein has had to work at as CEO. 

She got the top job when Aflalo stepped down, right after the company’s Instagram posts and Black Lives Matter donations were greeted with allegations of racism from former employees. 

“It was a really hard time,” Borenstein said. “I think for our industry broadly, we weren’t alone in this situation. Reformation had done a lot really well, sustainability and growth, but there were things where we needed to improve. Our rigor and structure around people, our approach to maintaining that culture, especially with the dispersed workforce with retail, was something we didn’t have enough focus or guardrails on. We grew up as an organization through it. It was a hard way to grow up . . . but I think we became a much better and stronger organization because of it.” 

The brand now seems to be hitting its stride. 

Reformation is on track to “comfortably” exceed $500 million in sales this year and has seen margins on earnings before interest, taxes, depreciation and amortization in the high teens for the last five years, the CEO said.  

Ninety-two percent of the business is conducted through the direct to consumer channel. 

And Borenstein said the brand has been seeing “momentum” in sweaters, denim and shoes. 

“Last year was a really strong year for us with these growing emerging categories where you can just see 70 percent of our customers were shopping across categories now and we are becoming this destination,” she said. 

A third of the brand’s goods are made in North America, mostly in the Los Angeles area, where the brand dodged the worst of this month’s wildfires.

Reformation also had something of a marketing coup, featuring Monica Lewinsky in a campaign in March 2024 that created 9 billion impressions in a week. 

“It was a moment where Gen Z discovered her for the first time and so they were all over TikTok being like, this woman’s amazing,” Borenstein said. “We were launching workwear, so it was a really good way for us to get the message out there.” 

 It was a gutsy marketing move.

“You have to be a little bit, not insensitive, but a little bit ‘asensitive’ to the broader world going around you — know what’s going on, but then also willing to not care always,” she said. 

Reformation started off differently by focusing so heavily on sustainability — and is still at it, even as President Donald Trump pushes his “Drill, baby drill,” ethos from the bully pulpit of the White House.

“I don’t look at the news day to day to understand his point of view or how things are changing,” Borenstein said. “I think our business is a bit broader. We’re going to continue our mission, which is making great product, delivering great financial outcomes and environmental ones at the same time.  

“I think being a business like ours, you need to be able to have long-term goals and vision,” she said. “And so it’s not just sustainability. The world is very fickle these days.”

It’s a compelling picture and, if it sounds like she’s making a sales pitch, she kind of is. 

CEOs, of course, are always selling, but Borenstein has a little extra reason. 

Reformation was bought in 2019 by private equity firm Permira, which sooner or later is going to look to make its exit. 

“I believe in the business,” Borenstein said. “I believe this is a multibillion-dollar opportunity. The last five years was proof points of, ‘Can we do it?’

“I’ve been fortunate to have an incredible partner. They will need to have a return. And so if I don’t get ahead of going to figure out all the options, I’m going to not love what my outcome is for our team,” she said. 

“Where we are is, let’s have lots of conversations, let’s understand what the options are so that we can make an informed decision when the time is right. Obviously something will happen in the next 24, 36 months, whatever it may be, but I think it’s when you aren’t proactive about it that it may not be the best outcome for what the potential of the business is.”

The Bottom Line is a business analysis column written by Evan Clark, deputy managing editor, who has covered the fashion industry since 2000. It appears every other Thursday.