In yet another acquisition spree under the new chief of ecommerce, Marc Lore, reports indicate that Walmart is holding talks with a view to buying Bonobos, a New York City, New York-based fashion retailer that caters to men. According to sources, Walmart and the 10-year-old Bonobos have come to an agreement on the price though due diligence is yet to be finalized.
This would be the fourth online retailer that Walmart would be acquiring in seven months since Lore joined the retail giant after his firm, Jet.com was acquired by the largest brick and mortar retailer in the United States. Some of those acquisitions include ShoeBuy, an online shoe retailer; MooseJaw, a seller of outdoor gear; ModCloth, an online retailer focusing on women’s clothes. When Jet.com was still operating independently of Walmart, Lore also acquired Hayneedle, an online retailer of furniture.
Threat from Amazon
“We’re behind. We need to catch up,” Lore said at a Recode event earlier in the year.
So far the biggest deal has cost Walmart approximately $70 million. Bonobos is, however, expected to cost more than that. It is estimated that Bonobos has annual revenues ranging between $100 million and $150 million. Its financial shape is thus better than that of ModCloth which was acquired for a figure that was lower than 1X revenue.
The norm in an online business such as this one is that it could be priced at anywhere between 1X revenue and 2X revenue. In 2014, the value of Bonobos was put at $300 million when it was in the process of raising $55 million.
Started in 2007 by Brian Spaly and Andy Dunn, Bonobos initially focused on selling dress pants that were designed and targeted at athletic men. The ecommerce firm has since then seen an expansion into outerwear, suits and dress shirts. Bonobos has also begun selling through a brick and mortar retailer, Nordstrom, besides its own online platform. Nordstrom is also an investor in Bonobos.
In the last couple of years, Bonobos has launched over 30 physical showrooms which are referred to as Guideshops and from where clients can get themselves fitted. They can also make orders which are then delivered to them.
Besides Nordstrom, other investors who have put money in Bonobos include Mousse Partners, Lightspeed and Forerunner Ventures. This was in a bid to aid in expansion. Discussions have been ongoing for the past few months with a view to increasing the amount. Some of the challenges the