Clothes sometimes sell for a steep discount at Bonobos. Thursday night, the company itself sold for a loss.
Walmart has announced that it’s offloading the trendy menswear brand, selling it to management firm WHP Global and retailer Express for $75 million. That’s a steep loss for Walmart, which acquired the brand in 2017 for $310 million as part of a failed attempt to diversify its online presence under previous management
WHP Global is little-known company that owns some recognizable brands, including the Toys “R” Us, Anne Klein and Joe Jeans. Last year, WHP took a 60% stake in Express. WHP is buying the Bonobos brand for $50 million, while Express will has acquired “operating assets and assume the related liabilities” for $25 million.
“Bonobos is delivering double-digit sales growth and we plan to continue that momentum while also realizing operating synergies and other economies of scale,” said Tim Baxter, Express CEO in a statement.
Express (EXPR) shares jumped more than 16% in premarket trading. The deal is expected to close later this year.
For Walmart, dumping Bonobos means that its tightening its focus on its core retail business in anticipation of a rocky economic environment ahead. In a note, Neil Saunders, managing director with GlobalData, wrote that discounted price for Bonobos “reflects the current weaker outlook across retail, but some is also the result of Walmart not having done much to develop the brand over the past six years.”
Bonobos is a better fit for WHP and Express, Saunders said, because they have a stronger focus in fashion and an established global presence to help the 16-year-old brand overseas. For Express, this is a “welcome diversification from its core business which is far too exposed to the sluggish middle market,” he said.
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