What will Walmart do with its newest acquisition, ModCloth?
Those who thought that Walmart’s acquisition of Moosejaw came out of left field should be prepared for another stunner. According to reports, the retailer is about to become the proud owner of ModCloth, an e-tailer known for selling vintage-inspired clothing for women of all shapes and sizes, as the result of an acquisition made by its Jet.com business.
The news of the deal, which was first reported by Jezebel, appears to have come as a shock to the rank and file at ModCloth. The company’s CEO, Matthew Kaness, notified employees of the deal yesterday, and current staff received employment offers from Walmart. Closing on the acquisition is expected to happen today with a formal announcement made on Friday.
ModCloth has gone through a difficult period over the past two years, seeing several rounds of layoffs. The company, which grew sales to $150 million by the end of 2015, has found it difficult to turn a profit. Venture capital, which flowed freely in ModCloth’s earlier days, has been hard to come by. According to a Recode report, ModCloth may not even get the nearly $80 million investors put into the company in its deal with Jet.
As reported by CNBC, Walmart CEO Doug McMillon, who spoke earlier this week at the Bank of America Merrill Lynch Consumer & Retail Technology Conference, said access to new product assortments was a deciding factor in recent deals made for Moosejaw and ShoeBuy.com. It would appear the same is true in the case of ModCloth.
“We can pick up some of these companies that are great in terms of the assortment and the service they provide, but they don’t have enough money to lose, to go market their brand and scale it,” said Mr. McMillon.
- Women’s Retailer Modcloth To Be Bought By Jet.com, Which Is Owned By Walmart – Jezebel
- Walmart is acquiring ModCloth, the online women’s fashion retailer – Recode
- Wal-Mart is about to scoop up another online retailer – CNBC
- What will Walmart gain from its Moosejaw acquisition? – RetailWire
- Will its acquisition of ShoeBuy.com boost Walmart’s online performance? – RetailWire
- Why did Walmart buy Jet.com? – RetailWire
DISCUSSION QUESTION: What do you expect Jet.com and Walmart to do with ModCloth? Are concerns about the cultural fit between ModCloth and Walmart valid when assessing the likelihood of future success?