REPRINTED FROM WWD - Originally posted, Aug 4, 2019
EXCLUSIVE: Go Global Inks Deal to Buy ModCloth From Walmart
Founded by Jeff Streader and backed by Asian suppliers, Go Global is bringing a new approach to the fashion M&A scene.
ModCloth is changing hands — again. But it’s still at the center of a plan to revolutionize how fashion and retail work.
Just two years after Walmart Inc. bought ModCloth to help expand and remake its digital presence, the mass giant has agreed to sell the brand to Go Global, which is bringing suppliers into the dealmaking game with a novel approach.
ModCloth’s staff was told about the change on Friday. The terms of the deal, which is expected to close this year, were not disclosed. ModCloth has estimated annual revenue of $150 million.
For Jeff Streader, Go Global’s founder and managing director, ModCloth is both a brand with untapped opportunities and the beginning of a long journey to link factories directly with consumers.
Streader, who has held a variety of senior roles at VF Corp., Kellwood Co., Guess Inc., Billabong and Marlin Equity, has wrangled 40 active strategic players — suppliers from Asia, especially China — as limited partners.
The idea is that they help provide backing to the investment firm and for the deal and then, where appropriate, will start to take over production while Go Global manages the brand and business.
Streader described it as “a reverse integration to the supply chain to reduce costs.”
While Streader declined to detail just how much money Go Global has to spend or what kind of production it can bring to bear, he said the firm has access to “significant capacity” and is looking to buy companies with revenues of $50 million to $500 million across the soft goods, hard goods and beauty spaces. Go Global describes itself as a “strategic investment platform” and is backed by suppliers looking to produce goods for the brands it buys. This is the group’s first investment. “I think there will be another one or two deals this year,” he said. “After that, you would see three a year. We’re focused on lifestyle brands that we think are underperforming, but still provide us opportunity based upon the brand.” Streader founded Go Global three years ago and has been staffing up and networking, giving the company the operating bench strength to follow that growth curve higher. Go Global managing director Christian Feuer brings more than 30 years of experience, having worked in private equity and led turnarounds at more than 10 retail brands with combined sales of over $1.5 billion. “Our team of experienced retail and brand practitioners will supplement existing management in areas of digital strategy, supply chain and operations,” he added. The company is pursing a potentially potent strategy since there are plenty of struggling brands ready for a new set of eyes and a new approach and plenty of underutilized factories in China, especially given the pressures of the trade war with the U.S. Growth in China’s industrial production slid below 5 percent recently — the slowest rate since 2002 — and a sign of just how hard factories are being impacted, especially since the overall official numbers can miss some of the industry-by-industry nuance. Anecdotally, multiple industry executives have pointed to fashion factories that are working at just half their capacity. Many producers are expanding into other markets, for instance setting up factories in Vietnam to avoid rising tariffs on Chinese apparel imports to the U.S. But that is only a partial fix. Suppliers are also looking to expand production for the Chinese market. And Go Global’s backers are trying to get closer to Western consumers — a step that Chinese producers have only recently started to take. There are, of course, risks in buying a brand and switching out the production, but Streader said Go Global is ready to navigate the market. With ModCloth, he said the brand can expand in a number of ways with the Go Global operations picking up more of the back end and the ModCloth team zeroing in on design and marketing. “We’re going to focus in on innovation in their digital strategy, investing in social engagement and listening to our core consumer and responding with product that she wants,” Streader said. Go Global plans to invest in artificial intelligence and predictive analytics to rev up the ModCloth business, which will be expanded to Europe and into China. This marks at least the third chapter for ModCloth, which was founded in 2002 and specializes in vintage-inspired fashions, shoes, handbags and accessories for 18- to 35-year-old women. Ashley Hubka, senior vice president of corporate strategy, development and partnerships at Walmart, said: “ModCloth’s strong brand equity positions it for growth in the future. We feel good about the progress at ModCloth and believe that Go Global’s team and scale-out strategy presents an attractive opportunity for the employees and customers of this beloved brand.” And if that strategy works well enough, it could spark more dealmaking for the beleaguered fashion world. #ModCloth #WWD #Walmart #Billabong #VFCorp #Investment #Acquisition #China #Asia #Strategic #Chinese #ArtificialIntelligence #Analytics