Walmart Inc. is exploring a potential sale for its ModCloth apparel brand in an attempt to stem losses from its e-commerce business, fashion industry website Glossy reported Aug. 5, citing ModCloth CEO Silvia Mazzucchelli.
"I can confirm that Walmart has received outside interest from buyers for ModCloth. We are in the process of exploring potential opportunities," Mazzucchelli told the website.
In July, online news portal Vox reported that the U.S. retail giant will likely sell the vintage-style clothing brand this year for less than its acquisition price. Walmart bought ModCloth in March 2017 for an undisclosed amount. Glossy reported that the price was between $50 million and $75 million. The ModCloth deal was one of several acquisitions that Walmart made to appeal to younger shoppers and better compete with online retailers such as Amazon.com Inc. It also acquired digitally native apparel brand Bonobos for $310 million in 2017 and Jet.com for $3 billion in 2016.
The company's e-commerce unit is expected to lose more than $1 billion this year, and it sees the sale of its acquired digital-native brands as a way to reduce losses, Glossy said.
Mazzucchelli, who became ModCloth CEO in April, acknowledged that while Walmart has supported the brand's backend operations, ModCloth has operated "quite independently" since the acquisition. The CEO also said that the brand has no plans to expand or open new stores as they "are still tweaking and experimenting with the formula" in their existing stores. ModCloth, mainly an e-commerce retailer, has four physical stores, in Los Angeles, New York City, Austin, Texas, and Washington, D.C.
Walmart did not immediately respond to a request for comment from S&P Global Market Intelligence.