Walmart, the world’s largest retailer, recently announced that it has sold its clothing retailer, ModCloth, at a significant loss of $235 million. The sale comes just two years after Walmart acquired the online fashion retailer for an undisclosed amount.
ModCloth was founded in 2002 and quickly gained a following for its vintage-inspired clothing and accessories. The company grew rapidly and was eventually acquired by Walmart in 2017 as part of the retail giant’s efforts to expand its e-commerce business.
However, the acquisition of ModCloth did not go as planned. Walmart struggled to integrate the online retailer into its existing operations and faced criticism from ModCloth’s loyal customer base, who felt that the company had lost its unique identity under Walmart’s ownership.
As a result, Walmart decided to sell ModCloth to Go Global Retail, a Los Angeles-based investment firm that specializes in acquiring struggling fashion brands. The sale price of $75 million represents a significant loss for Walmart, which reportedly paid between $50 million and $75 million for ModCloth in 2017.
The sale of ModCloth is just the latest example of Walmart’s struggles in the fashion industry. The company has long been known for its low prices and wide selection of basic clothing items, but has struggled to compete with more fashion-forward retailers like Zara and H&M.
In recent years, Walmart has made several attempts to improve its fashion offerings, including launching its own private label clothing brands and partnering with high-end designers like Lord & Taylor. However, these efforts have yet to significantly move the needle for the company’s fashion business.
Despite the loss on ModCloth, Walmart remains a dominant force in the retail industry. The company reported strong earnings in its most recent quarter, driven by strong sales in its grocery and e-commerce businesses.
However, the sale of ModCloth serves as a reminder that even the world’s largest retailer is not immune to the challenges of the fashion industry. As Walmart continues to invest in its e-commerce business and expand its offerings, it will be interesting to see how the company approaches the fashion category moving forward.
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