Reports indicate that Wal-Mart Stores Inc (NYSE:WMT) is holding talks aimed at acquiring Bonobos, a New York City, New York-based men’s fashion retailer, not to be confused pygmy chimpanzees. The two firms are understood to have agreed on the price and are now awaiting the completion of due diligence.
If the deal goes through, it would be the 4th eCommerce acquisition by the chief of digital at Walmart, Marc Lore who joined the biggest brick and mortar retailer in the world after his online retailer, Jet.com, was acquired about seven months ago. The online retailers that have been acquired include ShoeBuy, a shoe shopping site; MooseJaw; an outdoor gear shopping site and ModCloth, a women’s fashion shopping site.
Diversification strategy
Though the largest deal Lore has made so far is worth $70 million, sources have revealed that Bonobos could cost Walmart more than that bearing in mind that it brings in annual revenues of between $100 million to $150 million. At its last valuation in 2014, the figure was $300 million. This was when it managed to fundraise $55 million.
While it initially sold dress pants targeted at fit athletic men when it was founded back in 2007 by Brian Spaly and Andy Dunn, its chief executive officer, Bonobos has since then diversified into selling outerwear, suits and dress shirts. It has also begun selling through Nordstrom, a retailer who also doubles up as one of Bonobos’ investors. While the prices of dress shirts start at approximately $98, the prices of suits start at $550.
Fundraising efforts
To assist in its expansion efforts which has included opening 30 physical showrooms, Bonobos has raised over $125 million. This is from investors such as Mousse Partners, Lightspeed and Forerunner Ventures. Lately, however, it had become more challenging for Bonobos to raise funds since it had already raised huge amounts for a retail firm its size.
In buying Bonobos, Lore is trying to place Walmart on a path where it can benefit from retail sales that are increasingly moving online.
On Thursday shares of Wal-Mart Stores Inc fell by 0.39% to close the day at $73.15.
