Big-box retailer Walmart agreed on Friday to acquire US-based online men’s fashion retailer Bonobos in a $310m cash deal that will give exits to fellow retailers Nordstrom and Coppel, and continue its e-commerce buying spree.
Founded in 2007, Bonobos initially functioned as a specialist chinos producer and seller, but has since expanded its products to include a range of trousers, shorts, shirts, sweaters, suits, outdoor jackets and golfing apparel.
Bonobos was also one of the first e-commerce clothing brands to move to brick-and-mortar stores, launching a collection of Guideshops in 2011 that now number 35 across the US. Its clothes have been sold in Nordstrom department stores since 2012 when Nordstrom led a $16.4m round for the company, investing alongside Accel and Lightspeed Venture Partners.
The acquisition follows approximately $127m of venture funding for Bonobos, including $30m from a 2013 series C round featuring Nordstrom, Lightspeed, Accel, Mousse Partners, Glynn Capital Management, Forerunner Ventures and Felicis Ventures.
Coppel’s corporate venturing unit, Coppel Capital, led the company’s $55m series D round in 2014 at a $300m valuation, with all past investors returning. Bonobos reportedly began talks late last year for a round that would it have valued it at $500m, but funding was not forthcoming. It appears all its investors will make a profit in the sale.
Walmart is acquiring Bonobos as part of an ongoing strategy to grow its online operation, primarily to head off competition in the retail industry from e-commerce firm Amazon, which may have overshadowed the Bonobos deal by announcing a $13.7bn acquisition of grocery chain Whole Foods the same day, presaging its move into live retail.
Walmart’s first big buy involved paying $3.3bn for Jet.com, the e-commerce platform that had aimed to directly rival Amazon, in August 2016. It followed that with the $51m acquisition of Moosejaw, an outdoor apparel producer with a strong online presence, in February 2017, and the purchase of online women’s fashion retailer ModCloth the following month.
Post-acquisition, Bonobos founder and CEO Andy Dunn will supervise Walmart’s portfolio of what it calls digitally-native vertical brands, which include ModCloth, and which will be offered through Jet.com, sealing the link between the acquired companies.
Marc Lore, president and CEO of Walmart’s US e-commerce division and founder of Jet, said: “We are seeing momentum in the business as we expand our value proposition with customers and it is incredible to see how fast we are moving.
“Adding innovators like Andy will continue to help us shape the future of Walmart, and the future of retail. I am thrilled to welcome Andy and the entire Bonobos team. They have created an amazing product and customer experience, and that will not change.”
The fact Walmart is sectioning the companies off into a newly formed division indicates it has additional acquisition plans in mind. While much of the group’s online growth is coming from Walmart.com, it is positioning Jet as an option for millennial, urban customers who may not have access to Walmart’s large stores and who have traditionally treated the brand with disapproval and even disdain.
Collecting strong online brands like Bonobos and ModCloth that cater to a younger and more city-based – not to mention upscale – customer base would hypothetically give the firm a way to penetrate that market. Or it could also result in those brands losing their individualist cachet and their customers post-acquisition.
However, the real key to Walmart’s strategy can perhaps be seen in their appointment of Lore and Dunn to key roles in the firm. Walmart wants its e-commerce strategy to be overseen by people with experience in the space, and considering the stakes, paying more than $300m for an acqui-hire could actually end up proving decent business in the long run.
– Image courtesy of Bonobos