Bonobos Acquisition Is Good For WHP, Walmart And Bonobos

Bonobos is changing owners again.

The menswear brand will become the property of the brand management firm WHP Global and Express
EXPR
Inc. (EXPR) after the companies signed a definitive agreement with Walmart
WMT
in a deal valued at $75 million. The deal is expected to close in EXPR’s 2023 Q2.

Bonobos, founded in 2007, was acquired by Walmart in 2017 for $310 million. The deal is expected to close in the current quarter. Walmart’s sale of Bonobos marks an end to its Marc Lore (former Walmart U.S. e-commerce head) chapter that included deals for ModCloth and Moosejaw, businesses that the retailer later sold.

“Walmart is getting to back basics and focusing on its core business,” wrote Neil Saunders, managing partner at GlobalData, in an online discussion about the acquisition last week on RetailWire.

Other than learning from and experimenting with Bonobos, Walmart ultimately didn’t really know what to do with the brand and didn’t have all that much ambition to develop it,” wrote Mr. Saunders.

Some other experts on the RetailWire BrainTrust joined Mr. Saunders in praising Walmart for shifting gears from what was a hallmark strategy of the Mark Lore-era.

“Is Walmart better off disassembling its portfolio of Marc Lore-era acquisitions?” wrote Carol Spieckerman, president of Spieckerman Retail. “The answer is clearly ‘yes’ as brands get picked off one by one. That isn’t to say that Walmart’s stable of digital-native brands didn’t serve a purpose early on. No doubt much was learned, yet Walmart must maintain its focus as new challenges and opportunities are on the horizon.”

“Mr. Lore had some notable experiments, but it seems that the assets of Walmart are best deployed in building out the many avenues available to Walmart’s core business of providing value in both physical and e-commerce channels, and providing Amazon
AMZN
very stiff competition in the process,” wrote Jeff Sward, founding partner at Merchandising Metrics.

WHP, which took a 60 percent stake in EXPR earlier this year, is paying $50 million to acquire the Bonobos brand. EXPR will pay the remaining $25 million for Bonobos’ operating assets and related liabilities.

Many experts were likewise enthusiastic about the specific portfolio in which the brand is landing, and what it means for Bonobos.

“A merchandising strategy that is able to leverage data and insights from WHP Global and Express brands will be a win for Bonobos,” wrote Liza Amlani, principal at Retail Strategy Group. “Bonobos was lost under the Walmart umbrella and needs more hand-holding in order to fuel their strategic growth initiatives.”

“This seems like a better fit to me,” wrote Melissa Minkow, director of retail strategy at C&T. “Bonobos will benefit from ownership by a group that has more experience in specialty retail.”

The menswear line will continue to be led by CEO John Hutchison, who will become brand president of Bonobos and report to EXPR CEO Tim Baxter.

“Bonobos has a powerful wholesale equation with placement at Nordstrom
JWN
, so that’s a very muscular start,” wrote Mr. Sward. “There is every reason to believe that with all the synergies available to Express, and with the possibility of extensions into womenswear, they indeed can make Bonobos the home run it is capable of being.”

“Bonobos is delivering double-digit sales growth and we plan to continue that momentum while also realizing operating synergies and other economies of scale,” Mr. Baxter said in a statement.

EXPR, which also operates in the menswear space, expects the Bonobos deal to help it leverage its existing strength in the category and use marketing to increase awareness and customer acquisition for it and Bonobos. The retailer also expects to find synergies and achieve economies of scale in numerous departments including but not limited to logistics, product & sourcing, real estate and technology.

The BrainTrust saw a lot of potential value for EXPR, too, if the brand leverages its new acquisition smartly.

“Bonobos will have a better home under WHP Global and Express, both of which have deeper expertise to enhance and grow the business,” wrote Mr. Saunders. “Through its global connections, WHP will be able to expand the brand overseas, while Express will take care of running the U.S. operation under license. For Express, this is a welcome diversification from its core business which is far too exposed to the sluggish middle market.”

“That said, both companies will need to work hard to move Bonobos out of its niche and to increase awareness and traction with male consumers,” wrote Mr. Saunders.