The biggest international retailer, Walmart Inc. (NYSE: WMT), announced on Friday that it has bought Bare Necessities, a women’s lingerie retailer with a web presence, for an undisclosed amount. Bare Necessities will carry on functioning as a standalone business. It is the second apparel-focused buyout in less than two weeks as Walmart looks for deeper advances into the online fashion sector. Last week, Walmart obtained Eloquii, a new fashion firm that offers plus-sized clothing. The acquisition of Bare Necessities closed on Friday, Walmart revealed.
Walmart’s series of acquisitions
The takeover of Bare Necessities depicts a feeling of urgency to guard market shares. According to a Morgan Stanley report, Walmart had a market share of 8.6% in the US apparel market in 2017. Amazon was close on their heels with 7.9% and Target with 4.8%. The report anticipated Amazon would surpass Walmart as the numero uno retailer in the apparel division in 2018.
In a blog post, Denise Incandela, head of fashion, Walmart US eCommerce, said: “The acquisition of Bare Necessities fits well into our broader acquisition strategy, which includes two different types of companies: category leaders … and digital brands that offer unique products.”
Bare Necessities will carry on functioning as an independent brand. The company was set up in 1998 and offers bras, swimwear, shapewear, sleepwear, etc. Bare Necessities stocks over 100,000 SKUs (Stock Keeping Unit) from over 160 brands, as per Denise Incandela’s blog post.
Walmart did not disclose extra details on the effect of the acquisition on the bottom line and did not explain how this takeover will improve its market share in the category. Noah Wrubel, co-founder and chief executive of the lingerie retailer, will manage the intimates division on Walmart.com and Jet.com, which the retail giant acquired in 2016. Wrubel also intends to run the Bare Necessities business. Bare Necessities’ team of over 170 employees and its co-founder Bill Richardson will remain stationed at Edison, N.J.
In August, Walmart signed up comedian and talk show compère, Ellen DeGeneres, to introduce a women’s clothing line. Similarly, last year, the Bentonville, Arkansas-based Walmart entered into an agreement with the department store chain Lord & Taylor, a company owned by Hudson Bay Co., and began offering the latter’s products on Walmart.com. The partnership with Lord & Taylor preceded the acquisition of ShoeBuy, which specializes in footwear and apparel; Bonobos, which offers men’s clothing, Moosejaw, which offers outdoor wear; and ModCloth, a web-based seller of women’s apparel.
Walmart’s series of small fashion-business acquisitions is structured to assist the retailer gain access to the present generation clients who shop elsewhere. Through this strategy, Walmart aims to get back its shares lost to Amazon.com and others.
Following the news of the acquisition, the shares of Walmart rose 0.95% to close at $94.81 per share. The purchase news favors further upside for the stock.
Technically, the stock is consolidating at 94 levels. Furthermore, the Chaikin money flow indicator has crossed into the positive territory. As a result, there is a possibility of another rally in the stock.
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