Walmart Acquires Womenswear Online Site ModCloth

More consolidation has taken place in the online fashion world. Walmart on Friday announced it has acquired ModCloth, a retailer of womenswear that focuses on the younger, progressive demographic with a broader range of sizes that go beyond only the tall and thin look.

The news of the acquisition by Walmart confirms reports released earlier this week about the pending acquisition.

Earlier reports had said that the Walmart subsidiary Jet.com had acquired ModCloth. A statement by Walmart did not note that but one from ModCloth co-founder Susan Koger does make mention to Jet.com.

Koger’s statement said she was excited to be announcing that the company would join with Jet.com and Walmart.

Koger and Walmart both noted that the team from ModCloth would continue operating the site and the store as a unit that is standalone and a complementary brand to other sites in e-commerce it already owns.

The CEO of ModCloth Matthew Kaness, his team of executives and the more than 300 current employees at ModCloth would continue being based in Los Angeles, San Francisco and Pittsburgh, and will become a part of Walmart U.S. e-commerce organization.

Terms of this deal were not disclosed, beyond it being released by Walmart that it was for all-cash that was similar to two prior deals that included Moosejaw for $51 million and ShoeBuy for $70 million.

One source very close to this deal said the deal was for $50 million to $75 million and that the ballpark figure of Walmart appears to have confirmed that estimate.

This is not a strong outcome for ModCloth, which raised more than $78 million from different investors that include Notably, Accel Partners, Norest, Floodgate, First round and Norwest. Accel and Norwest back Jet.com as well, which was acquired for $3 billion by Walmart during 2016.

As with its acquisition of Jet.com, the Walmart strategy is buy even more online brands which will help it grow its reach to new demographics.

In this instance, Walmart wants to target in a better way a hipper and younger clientele that may have shopped previously at Walmart.

Other acquisition in this vein included Moosejaw the outdoor retailer in February of 2017 for $51 million.

Walmart found ModCloth attractive for a number of reasons including strong presence in social media, highly engaged community as well as how the brand developed its reputation for inclusiveness ranging from lifestyle inclusiveness to body positivity to diversity of size.

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