Walmart Inc. is selling off another of its e-commerce clothing brands, just a week after selling menswear line Bonobos at a steep loss.
FullBeauty Brands said in a news release Friday that it's buying the plus-size women's fashion brand Eloquii Inc., but didn't provide the terms of the deal. Walmart reportedly paid $100 million to acquire the company in October 2018.
Walmart said last week that it was selling Bonobos, which it bought for $310 million in 2017, for $75 million.
And in February, the Bentonville-based retailer sold its outdoor lifestyle brand Moosejaw to Dick's Sporting Goods for an undisclosed sum. Walmart paid $51 million for Moosejaw in 2017.
All these companies sold their wares mainly online when Walmart began snapping them up in a buying spree led by Marc Lore, who at the time was the e-commerce chief for Walmart U.S.
Other online companies that Walmart acquired as it was trying to build up its e-commerce business included ModCloth, Bare Necessities and ShoeBuy.com, which it renamed Shoes.com.
However, the investments failed to turn a profit even after several years. Walmart had sold off several of these brands by late 2021.
Walmart said through a spokeswoman on Friday that Eloquii's entry into its portfolio of digitally native brands expanded Walmart's assortment of women's clothing in sizes 14 and up and added "unique and differentiated product in an underserved but growing segment."
But the company said that "since acquiring Eloquii, Walmart.com has now grown to hundreds of millions of items, and we've decided it's the right time to sell Eloquii."
Emerson Delgado, a senior consulting manager with McMillanDoolittle LLP, affirmed that Walmart's acquisition of brands like Bonobos, Moosejaw and Eloquii were part of a strategy to sell merchandise to new and different consumer segments than their core customer.
However, "the inherent risk of a diversification-through-acquisition strategy is losing focus on your core business and core target customer," Delgado said.
"It's like if McDonald's tried to grow sales by offering prime steak sandwiches and keto grain bowls," he said. "It might work to a degree, but wouldn't fit well with their brand positioning; it would probably be confusing for both their current customers and the new consumers they are targeting; and is probably an operational nightmare behind the scenes."
Delgado said Walmart now seems to be shifting its focus back to its core customer and business.
"This doesn't mean they aren't looking for alternative attractive revenue streams," Delgado said. "It means that the opportunities they are pursuing are more congruent and synergistic with what they already do so well."
"The opportunities they are focusing on now, like retail media networks, omnichannel, and even fintech are ways they can grow revenue, and margin, without straying from their brand positioning and target customer," Delgado said.
"They have pivoted from trying to grow by selling different sorts of products to new types of target customers to a model where they are trying to maximize the revenue they can harvest from their current customer base," Delgado said. "If done right, I think it's a smart strategy."
Carol Spieckerman, a retail consultant and president of Spieckerman Retail, also sees Walmart's divestiture of yet another direct-to-consumer brand "from the Marc Lore-era of acquisition" as being about focus.
"Walmart's product-based businesses will play a decreasing role going forward as a new world of opportunity beckons, much of it tied to Walmart's growing solutions and services portfolio," Spieckerman said.
"Walmart's non-product businesses are highly profitable and scalable, so eliminating distractions makes a lot of sense," Spieckerman said. "No doubt Walmart learned a lot from the user bases and talent that came with these deals, but not everything is meant to last forever."