Six years after acquiring DTC menswear brand Bonobos for $310 million, Walmart is selling it to brand management firm WHP Global and apparel retailer Express Inc. for a combined $75 million.
WHP Global is paying $50 million for the Bonobos brand itself, while Express will acquire its operating assets and assume related liabilities of its business for $25 million.
The deal is expected to close in Express’ second quarter, subject to customary closing conditions.
When Walmart snapped up Bonobos in 2017, it was in the midst of a buying spree that also included the acquisition of Amazon rival Jet.com, women’s apparel brand Modcloth, outdoor gear e-retailer Moosejaw, women’s plus brand Eloquii and others.
The retail giant has been slowly dismantling that portfolio of e-commerce brands, including selling off Modcloth in 2019, winding down Jet in 2020, and, most recently, selling Moosejaw to Dick’s Sporting Goods.
Bonobos and Walmart from the jump seemed to be an awkward fit, exemplified by the brand chief’s declaration in 2018 that “Nothing has changed, but everything has changed.” Shortly after Walmart sold Modcloth, it made cuts to Bonobos’ workforce. At first the brand retained a fair bit of independence, operating via its own website and guideshops, but last year it introduced a sub-brand to be sold in Walmart stores.
Express is grappling with declining sales and tanking shares, though its new UpWest brand is expanding and performing well. Despite the troubles there, Bonobos may have a better chance at thriving under its new owners than it did at Walmart, analysts say.
Lately Walmart has taken several steps to tighten up its operations, including closing unprofitable stores and reducing its workforce throughout its e-commerce fulfillment network. That also means “ditching some of the acquisitions it made over the last decade as it toyed with ecommerce and made forays into different parts of the retail market,” GlobalData Managing Director Neil Saunders said in emailed comments.
“Bonobos is the latest brand to be offloaded and is being sold for way under the price Walmart paid for it back in 2017,” he said. “Part of this diminution in value reflects the current weaker outlook across retail, but some is also the result of Walmart not having done much to develop the brand over the past six years. Other than learning from and experimenting with Bonobos, Walmart ultimately didn’t really know what to do with the brand and didn’t have all that much ambition to develop it.”
Liza Amlani, principal and co-founder of Retail Strategy Group, also said that Walmart was not the right home for Bonobos. But Express’ national footprint and omnichannel strategies as a specialty apparel retailer, and the consumer insights from Express and WHP Global, will be helpful to the brand as it strives for growth, she said by email.
“This will be a win win for all brands as Bonobos is a leader in product, material and fit and can share these insights across the WHP Global Brands and Express,” Amlani said. “This is the beauty of this acquisition - all brands can learn from each other while sharing best practices from operations to product creation.”
Bonobos helps Express diversify from a core business that “is far too exposed to the sluggish middle market,” Saunders said.
“That said, both companies will need to work hard to move Bonobos out of its niche and to increase awareness and traction with male consumers,” he also said.