Web-avid, Wal-Mart buys Moosejaw

Posted: February 16, 2017 at 4:30 a.m.

Wal-Mart Stores Inc. continued to expand its online portfolio Wednesday, acquiring Michigan-based retailer Moosejaw for about $51 million.

The cash deal closed on Monday and was the company's third online retailer purchased in the past five months as it strengthens its e-commerce presence. Wal-Mart acquired Jet.com and home furnishings retailer Hayneedle.com in a $3.3 billion transaction that closed last September. Jet.com purchased ShoeBuy.com for about $70 million on Dec. 30.

Moosejaw, which specializes in outdoor apparel and goods, will remain based in Madison Heights, Mich., and continue to operate as a stand-alone and complementary brand much like Jet, Hayneedle and ShoeBuy.

Wal-Mart spokesman Ravi Jariwala said Moosejaw is a good addition for the retailer because of its "strong heritage," industry relationships and brands that are "beloved and cherished."

Moosejaw, which was founded in 1992 with a physical store in suburban Detroit, carries more than 400 brands that include North Face and Patagonia. The company also has outdoor gear for activities like camping, hiking and biking.

Ken Perkins, president of research firm Retail Metrics LLC, said the acquisition gives Wal-Mart access to more offerings in apparel and accessories, a category that has become the largest in online retail, according to data from comScore.

"It's not a major, major purchase, but Moosejaw does carry about 120,000 different [products] and a bunch of major outdoor apparel retail brands. Those are things you wouldn't see at Wal-Mart stores," Perkins said. "It's another avenue for them to move into the e-commerce apparel side of things, which they're trying to do and which Amazon has been very aggressively doing over the last few years."

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Moosejaw Chief Executive Officer Eoin Comerford, his executive team and the company's more than 350 employees will continue with the company. They'll also become part of Wal-Mart's new U.S. e-commerce retail organization. Comerford will lead Wal-Mart's online outdoor business across all platforms, including Moosejaw, Wal-Mart.com and Jet.com.

Neil Stern, a senior partner at Chicago-based retail consulting firm McMillan Doolittle, said the acquisition is "immaterial" to Wal-Mart's revenue given the size of the companies. But the opportunity to acquire Moosejaw's expertise in outdoor retail is key. Moosejaw is regarded as an innovative e-commerce marketer.

"They have a quirky personality," Stern said. "They do a very good job of one-on-one and personalized communications with the customer. So they've been able to carve out a niche in their business, which is premium outdoor wear through that kind of unique brand personality."

Comerford described his company as as having a "fun, irreverent, kind of wacky brand voice" and it was important to hold on to the reputation.

In addition to the online site, Moosejaw also has 10 physical locations. Seven of the 10 stores are in Michigan, and the others are in Chicago, Boulder, Colo., and Kansas City, Mo.

"To maintain that distinct culture, you have to maintain a distinct company," Comerford said. "So Moosejaw will run itself, have all of our stores, all of our sites. We'll maintain the same premium online presence with premium brands."

Moosejaw's brands and products won't necessarily begin appearing at Walmart.com and Jet.com as part of the acquisition, according to representatives from both companies. Those decisions will be left up to the suppliers.

Wal-Mart spokesman Jariwala said: "If they're interested in expanding their consumer reach, the good news is if you look at our portfolio, we've got all these different sites they can choose from. Those are conversations we'll have with the brands. But nothing is being forced. That's all going to be at the brands' discretion."

Wal-Mart's next step in grabbing online market share was announced the same week Berkshire Hathaway Inc. disclosed it had further reduced its stake in the retailer's stock to less than 2 million shares as of Dec. 31, according to The Associated Press. Berkshire held more than 60 million shares in 2014, but CEO Warren Buffett believes that online retailers like Amazon.com present an increasing threat.

Wal-Mart has been aggressive with its e-commerce operations, which are now headed by Jet.com founder Marc Lore.

Wal-Mart said last October that it would shift more of its investment toward e-commerce and technology instead of new store openings during the fiscal year to keep up with the changing habits of consumers. The company recently restructured its e-commerce team, which is a blend of Walmart.com and Jet.com leaders. Wal-Mart also recently introduced free two-day shipping, ending its subscription-based ShippingPass program that was viewed as an answer to Amazon Prime.

Acquisitions also are part of the company's growth strategy. Comerford said Wednesday that Moosejaw's conversations with Wal-Mart began a few months ago when it reached out searching for an outdoor retailer to add to its online offerings.

"We're really proud of what we've created here," Comerford said. "But now working with Wal-Mart and being able to leverage the incredible scale that Wal-Mart can bring -- not to mention the capital they can bring -- we're going to be able to take that Moosejaw story to a much wider audience."

Business on 02/16/2017