Wal-Mart will pay $310 million in cash for the apparel upstart, which focuses on fitted clothing for men. The move is part of Wal-Mart’s bid to gain online prestige, along with customers that may not shop at its big-box stores.
Wal-Mart Stores announced its long-awaited acquisition of online clothing seller Bonobos, just in time to have Amazon.com steal the spotlight with its own deal.
Wal-Mart will pay $310 million in cash for the apparel upstart, which focuses on fitted clothing for men. Andy Dunn, Bonobos’founder and chief executive officer, will continue to oversee the brand while reporting to Wal-Mart e-commerce head Marc Lore.
The move is part of Wal-Mart’s bid to gain online prestige, along with customers that may not shop at its big-box stores. It follows an agreement to buy the Moosejaw outdoor-equipment site in February and the women’s-apparel seller ModCloth in March.
The Bonobos buyout has been expected since April, when a person familiar with the discussions said a $300 million takeover was in the works. When Wal-Mart finally confirmed the acquisition on Friday, it was overshadowed by Amazon’s $13.7 billion agreement to buy Whole Foods Market — a transaction that marks the e-commerce giant’s biggest foray into brick-and-mortar retail (see story on A1).
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The Whole Foods deal sent shares of Wal-Mart on their worst rout in almost two years. Wal-Mart leads the U.S. grocery market, and any attempt by Amazon to disrupt the business is seen as a grave threat. The stock fell as much as 7.1 percent to $73.29, the biggest intraday tumble since October 2015; the shares closed the day down 4.7 percent at $75.24.
The incursion by Amazon increases pressure on Wal-Mart to improve its e-commerce business — something the Bonobos deal is meant to address. Wal-Mart entrusted its online division to Lore after acquiring his startup, Jet.com, for $3.3 billion in September. He helped the company’s U.S. e-commerce sales grow 63 percent in the most recent quarter.
“We’re seeing momentum in the business,” Lore said in Friday’s statement.
Founded in 2007, Bonobos got its start selling dress pants to men and quickly expanded its lineup to shorts and colorful plaid shirts. While the brand started as an online-only retailer, Dunn began incorporating brick-and-mortar stores into its strategy.
Bonobos has raised more than $120 million in total capital, according to CrunchBase, from investors such as Coppel Capital, Accel Partners and Lightspeed Venture Partners. Its backers also included Nordstrom, which sold the brand’s products in its department stores.