Lunya rode the pandemic loungewear wave to $50M — iOS 14 bankrupted it

Lunya was founded in 2012 as a direct-to-consumer luxury sleepwear brand, selling high-end loungewear through its website and Facebook ads. During the pandemic, demand for comfortable homewear surged, pushing Lunya's revenue to over $50 million in 2020 and 2021. Convinced the growth would continue, the company ordered roughly 60% more inventory than needed and signed retail leases for stores that were too large and expensive.

In April 2021, Apple rolled out App Tracking Transparency, requiring apps to ask permission before tracking users. Almost nobody opted in. Lunya's core marketing channel — Facebook advertising — became far less effective overnight. Customer acquisition costs rose sharply, conversion rates dropped, and monthly revenue began declining from June 2021. Revenue fell to $35 million in 2022 and dropped another 29% in the first quarter of 2023. By then, Lunya was sitting on 66 weeks of inventory against an industry standard of 13 to 16 weeks.

Lunya's seven retail stores lost $135,000 per month collectively while contributing only 8% of revenue. On June 16, 2023, the company filed for Chapter 11 under the small-business Subchapter V provision. CEO Blair Lawson, who had joined in June 2022, had been cutting costs and streamlining operations; the bankruptcy was the final step to shed expensive leases and old debt. The court confirmed the reorganization plan in November 2023 and the company exited in April 2024, continuing to operate online and through wholesale partners.