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Walmart (WMT) to Offload Bonobos to WHP Global & Express

Walmart Inc. WMT has been focused on enhancing its business through prudent buyouts and divestitures. The omnichannel retailer now plans to offload its menswear brand — Bonobos to fashion retailer, Express, Inc. EXPR and management firm, WHP Global — per media sources. Reportedly, the deal is priced at $75 million. Bonobos is engaged in selling menswear, which ranges from suits and trousers to swimwear online.

Sources revealed that the transaction is likely to be concluded in Express’s second fiscal quarter of 2023. We note that both parties expect to leverage EXPR’s expertise in omnichannel retailing, along with WHP Global’s partnerships in licensing and distribution, to accelerate Bonobos’ e-commerce business.

Walmart acquired Bonobos for $310 million in June 2017 in an attempt to accelerate the brand’s online presence, as well as attract young shoppers. That said, the big box retailer is currently committed to building alternative revenue streams like advertising and delivery instead of scaling online assortment or adding new brands to its portfolio. We believe that the sale of Bonobos to WHP and Express is likely to aid the brand’s growth.

Zacks Investment Research
Zacks Investment Research

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What Else Should You Know?

Walmart has taken robust strides to strengthen its delivery arm. These include its partnership with Salesforce, the expansion of the InHome delivery service, investments in DroneUp, a pilot with HomeValet, the introduction of Carrier Pickup by FedEx, the launch of the Walmart+ membership program, and more.

Prior to this, the company unveiled Express Delivery and joined forces with Point Pickup, Roadie and Postmates, alongside acquiring Parcel to enhance its delivery service. Furthermore, the company’s store and curbside pickup options add to customers’ convenience.

Walmart has been undertaking relentless efforts to strengthen its digital operations. Over the past year, it has made several improvements with respect to transforming its core digital experience for customers. The company’s global e-commerce sales formed more than 13% of its sales as of the end of fiscal 2023.

Walmart has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems. The company is innovating in the supply chain and adding capacity, as well as building businesses, such as Walmart GoLocal, Walmart Connect, Walmart Luminate, Walmart+, Spark Delivery, Marketplace and Walmart Fulfillment Services.

Drab View

On its fourth-quarter fiscal 2023 earnings call, this Zacks Rank #4 (Sell) company offered a cautious view for fiscal 2024 due to the persistence of increased prices and chances for further macroeconomic challenges. WMT’s adjusted earnings per share (EPS) view for fiscal 2024 suggests a decline from the year-ago period’s reported figure. Management envisions adjusted EPS in the band of $5.90-$6.05 for fiscal 2024, including a 14-cent LIFO impact. The company posted an adjusted EPS of $6.29 in fiscal 2023.

Shares of the company have dipped 4.7% in the past year compared with the industry’s decline of 6.3%.

Solid Retail Bets

Here we have highlighted two better-ranked stocks.

Kroger KR, a renowned grocery retailer, currently sports a Zacks Rank #1 (Strong Buy). KR has a trailing four-quarter earnings surprise of 9.8%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Kroger’s current financial-year EPS suggests growth of 6.6% from the year-ago reported figure. KR has an expected EPS growth rate of almost 6% for three to five years.

DICK'S Sporting Goods DKS operates as a sporting goods retailer and currently carries a Zacks Rank #2 (Buy). DKS has an expected EPS growth rate of 5.4% for three to five years.

The Zacks Consensus Estimate for DICK'S Sporting’s current financial-year EPS suggests a rise of 12.1% from the year-ago reported figure. DKS has a trailing four-quarter earnings surprise of 10%, on average.


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