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A few names come to mind when the phrase \u201cDTC darling\u201d is uttered \u2014 Warby Parker, Casper, Allbirds, Bonobos.<\/p>\n
While they\u2019ve all taken their own paths as they’ve evolved \u2014 from IPOs to mass store expansion \u2014 Bonobos’ journey has included several ownership changes over the past decade.<\/p>\n
About 10 years after launching, the men’s apparel brand was scooped up by Walmart for $310 million in a move questioned by industry experts. The acquisition came amid a wave of similar deals made by Walmart to purchase digitally native brands such as ModCloth, Eloquii and Moosejaw.<\/p>\n
However, as the mass merchant\u2019s priorities around its e-commerce strategy shifted, it began offloading those brands, including Bonobos, which last year was sold to Express Inc. and WHP Global for a fraction of what Walmart purchased it for.<\/p>\n
Not even a year after that sale closed, though, Bonobos found itself in bankruptcy court as its parent company Express Inc. filed for Chapter 11.<\/p>\n
With a new entity composed of three mall owners and a brand management firm purchasing both Express and Bonobos out of bankruptcy, what challenges remain ahead for the DTC brand?<\/p>\n
Ownership changes<\/h3>\n Bonobos was launched by Andy Dunn and Brian Spaly in 2007 and quickly became popular for menswear \u2014 particularly its pants.<\/p>\n
The brand redesigned khakis, featuring a more tailored thigh for a better fit, a curved waistband and a medium rise style.<\/p>\n
Bonobos was among the first class of DTC brands that helped change the way consumers shop for goods, with Dunn early on packing and shipping the brand\u2019s pants directly to customers from his Union Square apartment in New York City.<\/p>\n
The brand continued to expand, taking its products offline by opening stores, launching wholesale partnerships \u2014 including with Nordstrom \u2014 and attracting more funding from investors.<\/p>\n\n\n
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\nCo-founder of Bonobos, Andy Dunn<\/p>\n
Image courtesy of Brian McConkey<\/p>\n
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Bonobos eventually caught the attention of Walmart, which acquired the DTC brand in 2017. At the time of the acquisition, Bonobos said it was profitable and generating $150 million in annual sales.\u00a0<\/p>\n
But onlookers questioned whether Walmart \u2014 a mass merchant focused on value and saving its customers money \u2014 and the higher-end Bonobos brand would make a good fit.<\/p>\n
\u201cI remember, as a Bonobos-aware and Bonobos-liking consumer, thinking, \u2018This is the end. Walmart\u2019s going to kill it. They\u2019re going to really destroy the quality. They\u2019re going to just change everything,\u2019\u201d said Peter Fader, professor of marketing at The Wharton School of the University of Pennsylvania. \u201cAnd they didn\u2019t.\u201d<\/p>\n
The deal, however, did fit within a strategy Walmart was employing of scooping up other digitally native brands.<\/p>\n
And Bonobos\u2019 Dunn remained involved following the deal, transitioning to a new role overseeing Walmart\u2019s collection of digitally native brands, which at the time included shoe retailer Shoebuy, outdoor retailer Moosejaw and women\u2019s apparel retailer ModCloth.\u00a0<\/p>\n
But as Walmart\u2019s e-commerce strategy shifted, it began selling off several of the brands it acquired \u2014 including Bonobos, which Walmart in April 2023 sold to apparel retailer Express and brand management firm WHP Global for a combined total of $75 million.<\/p>\n
Coinciding with the closing of the deal, former Express Inc. CEO Tim Baxter in May 2023 said Bonobos had \u201cdelivered strong sales growth\u201d over the past three years and generated $200 million in sales in 2022.<\/p>\n
Baxter on earnings calls described Bonobos as a \u201cvery compelling addition to our brand portfolio\u201d and said that the acquisition \u201crepresents a significant growth opportunity for [Express].\u201d<\/p>\n
And Bonobos did help boost Express for a time. In November 2023, the brand helped Express Inc. post a 5% year-over-year sales increase\u00a0in Q3 to $454.1 million, by contributing $52.1 million in sales. The gains at Bonobos during the period were offset by declines at the company\u2019s namesake brand and UpWest brand, which fell 7% to $402 million during the period.\u00a0<\/p>\n\nBut Express Inc.\u2019s challenges proved too great. The company faced declining in-store sales as well as \u201cchallenged vendor relationships and funded debt obligations,\u201d leading it to file for Chapter 11 in April this year with a plan to close over 100 stores \u2014 though no Bonobos locations \u2014 and sell itself to a group which included WHP Global, Simon Property Group and Brookfield Properties.<\/p>\n
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\u201cIt doesn\u2019t actually matter who owns the brand. There are so many diehard fans.”<\/p>\n
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Liza Amlani<\/p>\n
Principal and Founder of Retail Strategy Group<\/p>\n<\/div>\n<\/div>\n
About two months later, the newly formed entity (which also included mall landlord Centennial) dubbed Phoenix Retail received court approval to acquire Express Inc\u2019s assets out of bankruptcy for $174 million.<\/p>\n
Through the deal, Phoenix Retail agreed to operate all DTC commerce in the U.S. for both the Express and Bonobos brands. The company also said more than 450 stores would remain open, including 49 Bonobos Guideshops, <\/strong>down from the 60 the brand operated in September 2023.\u00a0<\/p>\nA future under Phoenix<\/h3>\n As Bonobos settles into new ownership once again, it faces several challenges ahead \u2014 namely remaining relevant\u00a0<\/strong>to new and existing customers.<\/p>\nTo the brand\u2019s benefit, Bonobos sports a loyal customer base, making the numerous ownership changes less impactful in a sense, according to Liza Amlani, principal and founder of Retail Strategy Group.<\/p>\n
\u201cIt doesn’t actually matter who owns the brand,\u201d Amlani said. \u201cThere are so many diehard fans <\/strong>\u2014 the chinos that they\u2019ve been buying and the pants that they’ve been buying for years and years, no matter the ownership.\u201d<\/p>\nFor the most part, Bonobos\u2019 previous owners have largely left the brand alone in that from the customer\u2019s perspective, nothing has really changed, according to Fader and Amlani.<\/p>\n
\u201cJust going in and seeing the product in the last few years, there has been consistency in the quality, in the materials, in the fit, which tells me that they kept the ethos alive,\u201d Amlani said.<\/p>\n\nDunn has also been involved in Bonobos in some capacity for much of its existence. He served as CEO for the first 10 years after the brand\u2019s founding, and following its acquisition by Walmart in 2017, he took on a new role overseeing the mass merchant\u2019s digitally native brands, including Bonobos. While Dunn stepped down as Bonobos CEO in 2018\u00a0and left Walmart in 2020,\u00a0he <\/strong>rejoined Bonobos in June 2023 as an adviser\u00a0under WHP Global, a role WHP Global confirmed he still holds.<\/p>\nBut it\u2019s yet to be seen how deep his involvement as an adviser is.<\/p>\n
\u201cHow much of it was kind of real and operational versus optics? It was never clear to me that Andy’s heart and brain were in it as was the case when they were founded,\u201d Fader said. \u201cIt just seemed like almost window dressing that, \u2018Hey, Bonobos is going back to its roots.\u2019 We don’t really see any manifestation of it. \u2026 It’s not to say that they’ve been mismanaged. It’s not like anyone\u2019s done anything horrible to it. But I do think there have been some opportunities that just didn’t really turn into anything.\u201d<\/p>\n
On the other hand, having someone of prominence at the brand could ensure continuity as it eases into new ownership. \u201cI think it’s going to be great for the brand,\u201d Amlani said, noting, however, that \u201cit really depends on what the new ownership wants to do with the people in the brand.\u201d<\/p>\n
But that consistency might be negatively impacting Bonobos\u2019 growth.<\/p>\n
\u201cThey kind of lost their momentum,\u201d Fader said. \u201cThey had their original founding story from Andy Dunn stitching up pants in his dorm at Stanford. That whole story is just ancient history now and they never really replaced it with anything.\u201d<\/p>\n
Other DTC brands, like Warby Parker and Harry\u2019s have been able to \u201ckeep it fresh and interesting,\u201d expanding into other product categories, while remaining true to their brand identity, he said.<\/p>\n
\u201cThey’ve just lost a lot of their distinctiveness \u2014 not their fault \u2014 but they haven’t really done much to maintain their mind share,\u201d Fader said.<\/p>\n
The menswear space is increasingly becoming more competitive, especially with digitally native brands. Rhone has been opening more stores and expanding into additional product categories to reach new customers, while Indochino has been steadily building out its physical presence.<\/p>\n
Bonobos\u2019 own brick-and-mortar footprint also represents a potential area for growth for the brand.<\/p>\n
Bonobos, like many other digitally native brands, set out to take its products offline, opening its first physical store in 2011. Dubbed \u201cGuideshops,\u201d the locations allowed consumers to try on products, without actually carrying inventory. While customers couldn\u2019t walk out of the store with merchandise, associates could help them place their orders to have their items shipped to them.<\/p>\n
That concept has largely remained unchanged. What did change, however, was the brand\u2019s store footprint goal.<\/p>\n
Back in 2016, years prior to the pandemic upending and changing the retail landscape, Dunn said that the men\u2019s apparel retailer was planning to open 100 stores by 2020. Bonobos\u2019 current footprint <\/strong>is half of that. But with mall owners Simon, Brookfield and Centennial as its part-owners, there\u2019s potential for brick-and-mortar growth.<\/p>\n\u201cHaving that access to physical space, allowing [the] brand to scale \u2014 that is where I think we could really see some interesting things coming out of the deal,\u201d Amlani said. \u201cWhat happens to physical retail, and will Simon and Brookfield give Bonobos access to premium retail spaces that are innovative, that are new?\u201d<\/p>\n
What\u2019s important for the brand moving forward, though, is finding a way to connect with its customer base to give them a reason to keep coming back and broaden its appeal to attract new customers.<\/p>\n
\u201cIts narrative has just disappeared. They sell a quality product. I still admire some of the ways they go to market, but no one talks about them,\u201d Fader said. \u201cThey’re just kind of off the radar compared to the days when they were kind of a DTC darling.\u201d<\/p>\n
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Editor’s note: This story has been updated with information about Dunn’s current involvement with Bonobos.<\/p>\n<\/div><\/div>\n
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