ShoeDazzle, JustFab merger: World’s largest online shoe subscription?

Rivals ShoeDazzle and JustFab, L.A. fashion websites that sell women’s shoes, will merge after months of negotiations.

The companies said the merger would create the world’s largest fashion subscription e-commerce company, with more than $400 million in annual revenue and 33 million members.

Financial details and other terms of the deal, announced Wednesday, were not disclosed.

JustFab co-CEOs Adam Goldenberg and Don Ressler will keep their titles at the combined company, while ShoeDazzle CEO Brian Lee will become a member of the board of directors.

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Just Fab Inc. will be the parent company under the terms of the deal, but the brands will remain separate “because in fashion, women want choice,” Goldenberg said in an interview.

“There’s no woman who shops at one fashion retailer,” he said. “By having two brands, we’ll be able to reach a wider overall membership base and we’ll be able to appeal to women of different style personas.”

Neither brand has had a profitable year yet, a result of running a low-margin, hotly competitive business. But the combined company is expected to turn a profit in 2014, Goldenberg said.

The merger is hardly surprising given the brands’ similarities and proximity. JustFab, founded in 2010, is based in El Segundo and 4-year-old ShoeDazzle is a few miles away in Santa Monica. Both rely on a fast-fashion model, have celebrity ties (Kim Kardashian and Rachel Zoe for ShoeDazzle, Kimora Lee Simmons for JustFab), cater to the same customers, use a monthly subscription model and feature similar price points.

A deal also seemed an increasing possibility after ShoeDazzle stumbled last year under then-CEO Bill Strauss. Co-founder Lee ended up taking over the top position in the fall, but ShoeDazzle has yet to fully recover.

With the merger, the company will be able to speed up expansion plans internationally, add more categories and leverage scale and operational synergies. Goldenberg said the move would also enable them to take market share away from traditional footwear brands and other online shoe sellers.

The company estimates that the merger will help it capture 15% of the market share of online sales of footwear among 18- to 35-year-old women.

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