Walmart sells ModCloth for undisclosed amount

by Kim Souza (ksouza@talkbusiness.net) 1,361 views 

Walmart is starting to unravel the e-commerce portfolio it assembled over the past two-and-a-half years. On Friday (Oct. 4), venture capital firm Go Global Retail acquired ModCloth for an undisclosed amount. Go Global executive Jeff Streader said with the ModCloth management the new venture will have the ability to become a stronger global player in the premium fashion market.

Under Go Global, ModCloth will continue to operate independently, according to a release on the Go Global website.

ModCloth was one of the first e-commerce startups Walmart acquired in the spring of 2017 after Marc Lore became CEO of Walmart U.S. eCommerce. Analysts at that time valued the Walmart-ModCloth deal between $50 and $75 million. Walmart never publicly disclosed what it paid for ModCloth.

“We believe that ModCloth’s strong brand equity positions it for growth in the future,” Ashley Hubka, senior vice president of corporate strategy, development and partnerships at Walmart, noted in the release. “We feel good about the progress at ModCloth and believe that Go Global’s team and scale out strategy presents an attractive opportunity for the employees and customers of this beloved brand.”

Lore said recently Walmart was evaluating offers for ModCloth and there could be some other downsizing of the e-commerce portfolio. JetBlack, a startup under Walmart Store No. 8., is also reportedly going to be sold or spun off.

“When we acquired ModCloth, our primary focus was to build assortment through proprietary, digitally-native brands,” a Walmart spokesperson told the media. “Our approach has evolved and our current focus is on building direct-to-consumer brands that we can leverage in an omni way. Similar to online grocery, we are putting our investments in areas where our omni capabilities and unique advantages put us in a position to win.”

Analysts questioned the ModCloth acquisition in 2017, after the company received immediate pushback from loyal ModCloth customers who loved the uniqueness of the brand and felt it would be lost under the Walmart banner. From Walmart’s perspective, the deal was a way to harness trendy fashion expertise and a loyal customer base.

While some experts viewed the move as a strategic investment in the future, others said the stark contrast in cultures would be challenging.

With losses continuing to mount in the Walmart U.S. eCommerce division, Lore said recently the strategy was changing to become more of a build, rather than buy focus. He said some of the acquisitions lend themselves to eventually selling products on Walmart.com or maybe even in stores. He said the entire portfolio is being re-evaluated.

Comments

comments