Wal-Mart Acquires ModCloth in Latest Bid to Broaden Image

  • Women’s apparel site brings a whimsical vibe to retailer
  • ModCloth’s 300-plus employees will remain with the company

Wal-Mart Stores Inc. acquired online apparel seller ModCloth Inc. in an all-cash deal, part of an effort to expand its online operations and appeal to customers that may have avoided the retailer in the past.

ModCloth will continue to operate as a stand-alone site, as well as work with Wal-Mart’s other operations, the retail giant said on Friday. ModCloth Chief Executive Officer Matt Kaness and his 300-plus employees will join Wal-Mart’s e-commerce team. Terms of the transaction, which was completed on Friday, weren’t disclosed.

The move follows Wal-Mart’s acquisition of Jet.com for $3.3 billion last year in a deal that revamped its web division and brought in a fresh team of e-commerce executives. Wal-Mart CEO Doug McMillon has vowed to turn the brick-and-mortar colossus into “more of a digital enterprise” that can better challenge Amazon.com Inc.

The Bentonville, Arkansas-based company also bought outdoor e-tailer Moosejaw last month, adding trendy brands like Patagonia and the North Face to its assortment.

Founded in 2002 by Susan and Eric Koger, ModCloth began as a vintage clothing seller, hawking items hand-picked by Susan. The business grew into a $150 million retailer known for its whimsical dresses and quirky outfits for the retro girl, but it faltered in 2014 as struggling sales growth led to two rounds of layoffs. The business had run into a problem many niche fashion companies experience: being unable to attain mass appeal even though it had won over a patch of devout shoppers.

The founders stepped aside and hired Kaness, a retail veteran and former Urban Outfitters Inc. executive, to help bring ModCloth into the mainstream. The brand dialed back on its more outlandish offerings, hoping to appeal to a broader range of women, and it created its first private-label apparel line. Then the company embarked on a physical retail expansion, opening pop-up shops as it honed an approach for an upcoming fleet of boutiques. In late 2016, it opened its first-ever permanent store in Austin, Texas.

“Designers that sell on ModCloth who are interested in expanding their consumer reach will now have the opportunity to serve more customers through Jet.com and our other e-commerce sites,” Wal-Mart said in a statement Friday.

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