Online fashion retailer ModCloth, known for its vintage-inspired and indie apparel, is on the verge of being acquired by Walmart, by way of its subsidiary, Jet.com. The deal, which had already been rumored, is almost finalized and will fetch a price tag between $50 million and $75 million, sources tell TechCrunch.
This is a disappointing outcome for ModCloth, which had raised $78 million from notable investors like Norwest Venture Partners, FLOODGATE, First Round, and Accel Partners. (However, Norwest and Accel also invested in Jet). We are told that some of the capital will be going back to investors, but not all of it. Some of the acquisition money will go to retaining key employees.
The acquisition comes after a series of struggles for ModCloth, including several rounds of layoffs. The company saw little growth in 2014, and reduced its engineering team to just over half a dozen. In 2015, co-founder and CEO Eric Kroger was replaced by Matthew A. Kaness, previously Urban Outfitters’ Chief Strategy Officer – a move which staff were then fairly optimistic about, hoping for a turnaround. The management team was also largely revamped in 2015.
New hires with traditional retail backgrounds joined, including ModCloth CMO Mary Alderete, previously of True Religion Brand Jeans, Levi Strauss & Co. and Gap; and ModCloth VP of Stores & Retail Ops, Elizabeth Cooksey, previously of Nike, Free People, Anthropologie, and Urban Outfitters. Alderete only lasted a year, according to LinkedIn.
ModCloth also installed Nicolas Genest, the prior CTO of the European site vente-privee.com and The RealReal, as its CTO, replacing Udi Nir, who served as CTO from Dec 2012-2104. It overhauled it technology stack to scale the business. And it brought in Phil Neri, previously CFO of Serena & Lily, as its CFO that same year.
The initial plan was to use retail stores as part of its turnaround effort. This began with pop-ups in places like L.A. and San Francisco, and later, a retail store in Austin carrying a full range of sizes. The…