It looks like Walmart has entirely outgrown its D2C experimental phase. Weeks after announcing the sale of such clothing brands as Bonobos, ModCloth and Moosejaw, Walmart says it is also selling Eloquii, the plus-size ecommerce brand it acquired with a reported $100 million -- and plenty of hoopla – back in 2018--
FullBeauty Brands is the buyer, and adds the plus-sized apparel brand to a portfolio that already includes June+Vie and Swimsuits for All.
At the time of the purchase, Walmart heralded its decision to buy the digital native as way to extend its reach into the plus-size women’s apparel business, which it valued back then at about $21 billion.
The move made sense, given the aggressive steps the Bentonville, Arkansas giant was taking to inject innovative D2C apparel names into its apparel stable, which was often regarded as frumpy, bland and poorly made.
Walmart had already taken such aggressive steps as purchasing jet.com, described as “critical” for the retail giant's omnichannel plans, for $3.3 billion in 2016. It spent $310 million for the super-trendy Bonobos, best known for its men’s pants, and the $51 million for Moosejaw, an outdoor apparel collection, in 2017. That same year, it scooped up ModCloth, aimed at women under 35.
All those purchases, wags said at the time, would help Walmart up its digital game and strengthen its apparel portfolios. Importantly, such moves might help Walmart keep up with the faster, nimbler Amazon.
That strategy unraveled fast. By 2019, Walmart had sold ModCloth, and folded Jet’s team into its Walmart.com business. And by the following year, it shuttered Jet entirely.
Early this year, it moved into high gear with its D2C divestitures. Besides the Eloquii announcement, earlier this month, it unloaded Bonobos to WHP Global and Express for $75 million, about a quarter of what it spent to buy it. And Dick’s Sporting Goods scooped up Moosejaw back in February for an undisclosed sum.
It’s easy to look at those deals as so many failed experiments. But they taught Walmart a powerful lesson: It didn’t need those brands to become an ecommerce superpower. In its latest annual results, released in February, it reports that ecommerce sales gained 12%. Compared to two years ago, those sales are up 23%.
Rather than viewing the yard-sale prices Walmart’s gotten for its discarded D2C businesses as a reflection of a failed strategy, observers say it offers more of a comment on the rapid decline of the D2C business model.
Sure, Walmart’s decision to sell Bonobos for 76% less than it paid looks bad. But in its analysis, CB Insights points out that Warby Parker, the D2C eyeglass maker, is also down 71% in valuation. And Allbirds, the eco-sneaker brand, is trading at 91% less than its valuation when it first went public.
Few observers worry about Walmart’s ability to keep up with Amazon. “With unrivaled scale, prodigious procurement strength, a strong brand, and a growing ecommerce platform, we believe Walmart is the only American firm that can compete comprehensively with Amazon’s retail offering,” writes Zain Akbari, an analyst who follows Walmart for Morningstar.
“Walmart should be able to compete aggressively, particularly for the roughly 50 million households we estimate do not subscribe to Amazon Prime, a proposition solidified by its introduction of the Walmart+ membership program.”