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Wal-Mart (WMT) to Buy Online Men's Fashion Retailer Bonobos
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Retail giant Wal-Mart Stores Inc. (WMT - Free Report) recently announced plans to acquire Bonobos, one of the most popular men's clothing online brands in the U.S. Wal-Mart has been contemplating the acquisition since April to expand in the fast-growing online retail market and compete against the largest U.S. online retailer, Amazon.com, Inc. (AMZN - Free Report) .
Wal-Mart will pay $310 million in cash for the buyout, which is still subject to regulatory approval. The deal is expected to close toward the end of the second quarter or the beginning of the third quarter of this fiscal year.
Founded in 2007 by CEO Andy Dunn and Brian Spaly, Bonobos started as an e-Commerce shop, catering to the needs of athletes. Later, this New York-based company started producing dress shirts, suits and outerwears.
Nordstrom, Inc. (JWN - Free Report) is an investor in Bonobos and started carrying the brand in stores and on its e-Commerce site since 2012. Other than online sales, Bonobos also has more than 30 brick-and-mortar showrooms, called Guideshops, where customers can customize their orders and get them delivered at home. Bonobos generates between $100 million and $150 million in annual revenue.
Post the acquisition, Andy Dunn will oversee the company’s collection of digitally-native vertical brands, and will report to Marc Lore, president and CEO of Walmart U.S. e-Commerce.
The deal will be beneficial for both the parties. While Bonobos will get capital from Wal-Mart to expand its portfolio, Wal-Mart will be able to compete with Amazon better. The acquisition will also help the company to strengthen its footprint in the growing apparel industry in the online space. In fact, this will be the retailer's fourth major e-Commerce acquisition since the buyout of Jet.com, U.S. e-Commerce company, in Sep 2016. In March, Jet.com acquired trendy online clothing seller, ModCloth. Prior to ModCloth, Wal-Mart bought Moosejaw, an outdoor apparel and gear retailer for $51 million and e-Commerce shoe retailer ShoeBuy for $70 million in 2017.
Following the news of Wal-Mart’s acquisition plans, Amazon announced to buy Whole Foods Market, Inc. to expand into the grocery store business. Shares of Wal-Mart plummeted 4.7% following the Amazon merger news.
While the online king Amazon has been expanding its physical footprint, brick-and-mortar giant Wal-Mart has been ramping up its own e-Commerce business. Wal-Mart has been selling online since 1999, and is reportedly America’s third-largest e-Commerce retailer.
Wal-Mart launched its own mobile payment system called Walmart Pay in all of its 4,500-plus U.S. stores in Jul 2016. This system enables shoppers to pay through its existing smartphone app. This marks another step toward accelerating the company’s online business and making shopping easier and faster.
Wal-Mart is also aggressively trying to get a share of the pie in the online grocery shopping and delivery industry.In April Wal-Mart introduced a new program wherein it is offering discounts on online items, only if shoppers pick up their orders from a nearby store. The discount seems to be an added feature to Wal-Mart’s already existing delivery service called Walmart Pickup which enables customers to place orders online and then pick them up at a store for free.
In Jan 2017, the company started offering free two-day shipping to U.S. shoppers on a minimum order of $35 on over 2 million items. This program replaced Wal-Mart's existing two-day shipping program – Shipping Pass – that used to charge shoppers an annual membership fee of $49.
However, it still faces many headwinds which are likely to impact earnings in the near term. Higher expenses, lower margins at Wal-Mart U.S. and currency headwinds are expected to affect the results. Nevertheless, the company’s efforts to boost sales and regain investors’ confidence remain impressive.
Wal-Mart Stores, Inc. Price, Consensus and EPS Surprise
The stock has exhibited a bullish run on the index for the last one year. We note that in the said period the stock recorded 5.8% growth, outperforming the Zacks categorized Retail-Supermarkets industry, which showcased improvement of just 1.5%. We believe there is still much value left in the stock, which is quite evident from its VGM Score of ‘A’.
What further makes us optimistic about its performance in the near term is its low beta of 0.13 and long-term earnings growth rate of 6.1%. Further, the retailer delivered positive earnings surprises in the past seven consecutive quarters.
Zacks Rank & Key Picks from the Sector
Wal-Mart currently carries a Zacks Rank #3 (Hold).
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Wal-Mart (WMT) to Buy Online Men's Fashion Retailer Bonobos
Retail giant Wal-Mart Stores Inc. (WMT - Free Report) recently announced plans to acquire Bonobos, one of the most popular men's clothing online brands in the U.S. Wal-Mart has been contemplating the acquisition since April to expand in the fast-growing online retail market and compete against the largest U.S. online retailer, Amazon.com, Inc. (AMZN - Free Report) .
Wal-Mart will pay $310 million in cash for the buyout, which is still subject to regulatory approval. The deal is expected to close toward the end of the second quarter or the beginning of the third quarter of this fiscal year.
Founded in 2007 by CEO Andy Dunn and Brian Spaly, Bonobos started as an e-Commerce shop, catering to the needs of athletes. Later, this New York-based company started producing dress shirts, suits and outerwears.
Nordstrom, Inc. (JWN - Free Report) is an investor in Bonobos and started carrying the brand in stores and on its e-Commerce site since 2012. Other than online sales, Bonobos also has more than 30 brick-and-mortar showrooms, called Guideshops, where customers can customize their orders and get them delivered at home. Bonobos generates between $100 million and $150 million in annual revenue.
Post the acquisition, Andy Dunn will oversee the company’s collection of digitally-native vertical brands, and will report to Marc Lore, president and CEO of Walmart U.S. e-Commerce.
The deal will be beneficial for both the parties. While Bonobos will get capital from Wal-Mart to expand its portfolio, Wal-Mart will be able to compete with Amazon better. The acquisition will also help the company to strengthen its footprint in the growing apparel industry in the online space. In fact, this will be the retailer's fourth major e-Commerce acquisition since the buyout of Jet.com, U.S. e-Commerce company, in Sep 2016. In March, Jet.com acquired trendy online clothing seller, ModCloth. Prior to ModCloth, Wal-Mart bought Moosejaw, an outdoor apparel and gear retailer for $51 million and e-Commerce shoe retailer ShoeBuy for $70 million in 2017.
Following the news of Wal-Mart’s acquisition plans, Amazon announced to buy Whole Foods Market, Inc. to expand into the grocery store business. Shares of Wal-Mart plummeted 4.7% following the Amazon merger news.
While the online king Amazon has been expanding its physical footprint, brick-and-mortar giant Wal-Mart has been ramping up its own e-Commerce business. Wal-Mart has been selling online since 1999, and is reportedly America’s third-largest e-Commerce retailer.
Wal-Mart launched its own mobile payment system called Walmart Pay in all of its 4,500-plus U.S. stores in Jul 2016. This system enables shoppers to pay through its existing smartphone app. This marks another step toward accelerating the company’s online business and making shopping easier and faster.
Wal-Mart is also aggressively trying to get a share of the pie in the online grocery shopping and delivery industry.In April Wal-Mart introduced a new program wherein it is offering discounts on online items, only if shoppers pick up their orders from a nearby store. The discount seems to be an added feature to Wal-Mart’s already existing delivery service called Walmart Pickup which enables customers to place orders online and then pick them up at a store for free.
In Jan 2017, the company started offering free two-day shipping to U.S. shoppers on a minimum order of $35 on over 2 million items. This program replaced Wal-Mart's existing two-day shipping program – Shipping Pass – that used to charge shoppers an annual membership fee of $49.
However, it still faces many headwinds which are likely to impact earnings in the near term. Higher expenses, lower margins at Wal-Mart U.S. and currency headwinds are expected to affect the results. Nevertheless, the company’s efforts to boost sales and regain investors’ confidence remain impressive.
Wal-Mart Stores, Inc. Price, Consensus and EPS Surprise
Wal-Mart Stores, Inc. Price, Consensus and EPS Surprise | Wal-Mart Stores, Inc. Quote
Share Price Movement
The stock has exhibited a bullish run on the index for the last one year. We note that in the said period the stock recorded 5.8% growth, outperforming the Zacks categorized Retail-Supermarkets industry, which showcased improvement of just 1.5%. We believe there is still much value left in the stock, which is quite evident from its VGM Score of ‘A’.
What further makes us optimistic about its performance in the near term is its low beta of 0.13 and long-term earnings growth rate of 6.1%. Further, the retailer delivered positive earnings surprises in the past seven consecutive quarters.
Zacks Rank & Key Picks from the Sector
Wal-Mart currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>