Briefing

Walmart will sell fashion brand ModCloth, hold on to unprofitable Bonobos for now

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The retail giant acquired both companies in 2017, but the two brands are not profitable, according to multiple sources. Walmart has decided to keep Bonobos, the made-to-measure menswear label, but will sell ModCloth this year. It will also hold on to women’s line Eloquii, which is also not profitable. Walmart is projecting its U.S. e-commerce operations to lose more than US$1 billion this year on revenues of US$21 billion, according to sources. Walmart declined to comment. (Recode)

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Talking point: Walmart has spent big to compete with Amazon online. It bought the three fashion brands for around US$450 million combined. It also spent US$3.3 billion to acquire Jet.com, a membership-based e-commerce site, and US$16 billion on a majority stake in Flipkart, the Indian e-commerce marketplace. But while Walmart’s online market share has grown—from 2.6 per cent in 2016 to 4.7 per cent in 2019, according to research firm eMarketer—Amazon’s has expanded faster, from 32 per cent to 38 per cent. And, the fashion brands in particular face increasing competition from independent players. For example, Vancouver-based Indochino added chinos in September 2018, putting it into direct competition with Bonobos in more categories.