Walmart Inchas discussed the potential sale of its unprofitable clothing brands Bonobos and Modcloth with buyers, online news portal Vox reported https://www.vox.com/recode/2019/7/3/18716431/walmart-jet-marc-lore-modcloth-amazon-ecommerce-losses-online-sales on Wednesday, citing sources familiar with the matter.
The world's largest retailer bought a bunch of clothing brands including Bonobos and Modcloth in 2017 and Eloquii last year to appeal to younger shoppers in its effort to compete with Amazon.com Inc.
According to Vox's report, all three businesses are unprofitable and the decision to sell the brands comes after Walmart was "unable to turn around the company's economics" in the near term.
Modcloth will likely be sold this year, but Walmart plans to retain Bonobos, after contemplating a sale, the report said.
The report also noted that the retailer is projecting losses of more than $1 billion for its U.S. e-commerce division in 2019, on revenue of $21 billion to $22 billion.
Walmart declined to comment on the matter.
Last month, the company announced a sweeping overhaul at Jet.com, an online startup it acquired in 2016 for $3.3 billion, after it failed to live up to the retailer's e-commerce ambitions.
Jet was expected to boost Walmart's reach particularly among city dwellers and millennial shoppers, but sources told https://www.reuters.com/article/us-walmart-jet-com/jetcom-falls-by-wayside-as-walmart-focuses-on-its-website-online-grocery-idUSKCN1TD2PS Reuters in June that it had failed to drive online grocery sales and grow market share in urban areas.
Walmart had previously said it expected losses from its online business, including Jet, to increase in 2019.
Shares in the company were down nearly a percent at $110.71 before the opening bell.
(Reporting by Nivedita Balu in Bengaluru; Editing by Shinjini Ganguli)