- It's official: Walmart is selling the online-only apparel and accessories retailer ModCloth. On Friday, financial services firm Go Global Retail said it planned to acquire the vintage-themed banner for an undisclosed amount.
- Go Global expects to continue operating ModCloth under its current setup and to invest in digital capabilities such as artificial intelligence and predictive analytics, the firm said in a press release.
- The parties expect the deal to close later this year.
Had somebody not leaked to Vox's Recode that Walmart planned to unload ModCloth as it retools its online strategy, the sale may have come as a surprise. Now official, ModCloth's sale underscores a possible pivot at Walmart away from a still-fairly-new strategy, of relying on Jet and its acquisitions to reach a younger, hipper and more moneyed customer base.
It's been just a little over two years since Walmart announced its Jet unit would acquire the banner. Jet became the home of ModCloth, along with the brand's own e-commerce site, and other trendy online brands Walmart picked up in the years after the retail giant bought Jet and brought on Lore to accelerate the company's digital strategy.
So what happened? We know that Walmart has been restructuring its e-commerce operations. This summer, Marc Lore, who is CEO of Walmart's e-commerce unit, said Jet would lose its independent executive role as the website's operations become folded under the broader Walmart eCommerce umbrella.
Recode reported in July that, despite massive growth in Walmart's online sales, Lore was coming under pressure as the company faced a $1 billion loss on its e-commerce unit. According to the tech news site, Walmart has also mulled the sale of other brands it has picked up under Lore, including men's fashion retailer Bonobos.
Some in the industry scratched their heads at those acquisitions, which fell so far outside Walmart's core business focused on low-prices, massive stores and supply chain efficiency. Fans of ModCloth also expressed dismay at the time of the acquisition.
Walmart is also reportedly fielding inquiries from possible partners or buyers of its text-based concierge service for urban up-and-comers, JetBlack. The Wall Street Journal also reported that Walmart is in talks around a possible spin off of Jet Black as the service racks up an annual $15,000 loss per member.
ModCloth under Walmart has launched an outlet site, changed CEOs and launched physical showroom style "FitShops."
Walmart's Ashley Hubka, senior vice president of corporate strategy, said in a statement that, "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."
Under Go Global, ModCloth will go back to being a freestanding brand. The company — primarily an advisory firm and with a staff that boasts deep experience in retail — said in the release that it would keep focusing on ModCloth's core customers (women aged 18 to 35).
"Our team of experienced retail and brand practitioners will supplement existing management in areas of digital strategy, supply chain and operations," Go Global Managing Director Christian Feuer said in the release.