Walmart Is Acquiring Bonobos for $310 Million in Cash

Bonobos

Busy Friday.

Walmart just announced the acquisition of Bonobos for $310 million in cash.

From the press release:

Walmart today announced it has entered an agreement to acquire Bonobos, Inc. (“Bonobos”), one of the leading apparel brands built on the internet, for $310 million in cash. Following the closing, Andy Dunn, founder and CEO of Bonobos will report to Marc Lore, president and CEO of Walmart U.S. eCommerce, and oversee the company’s collection of digitally-native vertical brands. These are brands born online, and owned from design through distribution. The brands will be offered on Jet.com and possibly other Walmart brands in a variety of countries over time, and include Bonobos and recently-acquired ModCloth. […]

The addition of Bonobos is part of a broader e-commerce strategy to enhance the customer value proposition, including:

Offering customers low prices and convenient ways of getting the items they buy every day, like food and consumables;

Offering a vastly expanded assortment while building expertise in key long-tail categories, like apparel and home; and

Adding best-in-class owned, vertical consumer brands to be sold on those brands’ properties, and over time, Jet.com.

Recode:

As of two months ago, Bonobos was projecting 2017 revenue of around $150 million, and was growing around 30 percent year over year, according to a source. Sources say Walmart believes Bonobos has the potential over time to generate large operating profits for a retail brand of its size.

For Walmart, the deal marks at least its fourth acquisition of a digital-first retailer since Marc Lore took over as head of e-commerce in the U.S. last fall — others have included Modcloth and ShoeBuy.

Marc Lore and the jet-ified online part of Walmart seem to become an increasingly attractive anti-Amazon haven for US online retailers. The New York Times:

To Mr. Lore, buying a brand like Bonobos is not just about adding third-party apparel. It is also about acquiring the audiences that these start-ups have already attracted, and using Walmart’s resources to expand.

“We’re offering customers something new by buying these proprietary brands,” he said.

Partnering with Walmart — the biggest bricks-and-mortar retailer around — might have seemed extremely off brand for Bonobos.

But Mr. Dunn argued that since the Recode report, his company has not suffered a blow to its growth rate. And he contended that working for the Walmart of 2017 was exciting, particularly with Mr. Lore — a longtime mentor — reimagining the company’s e-commerce strategy.

“I’m here because of Marc,” Mr. Dunn said, adding, “I think Walmart is misunderstood in some ways.”

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6 comments

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