Why Bonobos thought selling to Walmart was better than going public

Founder Andy Dunn explains.

When Walmart — the largest U.S. retailer — acquired Bonobos — a somewhat yuppie mens clothing brand — for $ 310 million in June, it seemed a bit surprising.

First, because Walmart — via its Jet subsidiary, but still, Walmart — was buying a somewhat yuppie mens clothing brand.

And second, because Bonobos, one of the more promising of this current wave of digital-native apparel brands, was selling out for maybe less than it eventually could have, and not trying to make it huge as a standalone, public company.

At our Code Commerce event in New York today, Bonobos founder Andy Dunn explained his rationale to Recode Senior Editor Jason Del Rey.

At a decade old, Bonobos was looking at three “really exciting” options to help fuel some of its growth, Dunn said.

  • One was to take a small, $ 15 million round of funding and stay independent, but without getting any liquidity for founders, employees or investors.
  • Another option could have been to sell a chunk of the company to a private equity group, which would have probably meant ceding control. Not fun.
  • A third option turned out to be the move Dunn chose: Selling to another company — in this case, Walmart.

This got liquidity for shareholders, even if it wasn’t at a billion dollar valuation. And it also fetched some potentially useful tools for future growth, such as the infrastructure Jet is building out to get shipments to consumers faster, and access to a wider range of customers than Bonobos had been able to attract itself.

But what about staying independent and eventually getting liquidity — potentially at a much higher valuation — on the public markets?

“It’s a weird time to be a retail company,” Dunn said. “If you’re not Nike or Under Armour, or one of these really big vertical brands, or Chanel, or have tens of billions of dollars … it’s hard.” The struggle as a mid-sized player fed into his decision.

Going public might have also put the wrong pressures on the company, Dunn said.

“I would say, if we had gone the route of IPO, there would have been a lot of pressure to grow [a physical retail footprint] really quickly. Because what the public markets understand, when it comes to … retail, is store expansion.”

“Look at Lululemon’s IPO, look at Michael Kors’s IPO, look at the history of any brick-and-mortar companies, it’s same-store sales and new stores,” Dunn said. “We feel very excited in this new world that we don’t have the pressure to grow that super, super quickly to please a public market story to get the company public.”


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