Farfetch bets on sneakers with $250M Stadium Goods acquisition

Luxury fashion marketplace Farfetch will tap into the sneaker resale economy with its latest transaction.

The lines between streetwear and luxury fashion have blurred in recent years, especially as excitement around sneaker brands like Yeezy and Off-White has soared.

A marriage between a luxury fashion marketplace and a sneaker and streetwear reseller seems like a natural way to wrap up M&A in 2018. With that said, Farfetch has acquired New York-based Stadium Goods, opting to pay $250 million for the sneaker startup in a combination of cash and Farfetch stock. Headquartered in London, Farfetch went public on the New York Stock Exchange in September, pricing its shares at $20 apiece and raising $885 million in the process.

What’s more impressive is Stadium Goods’ journey to exit. The company, which sells new and deadstock products online and in a brick-and-mortar store in New York’s Soho neighborhood, was founded in 2015 by John McPheters and Jed Stiller and had only raised $4.6 million in venture capital funding from Forerunner Ventures, The Chernin Group and Mark Cuban, who is an advisor to the startup.

“There was a time not that long ago when you couldn’t wear sneakers and streetwear to nightclubs and restaurants,” McPheters, Stadium Goods’ chief executive officer, told TechCrunch. “But adoption of the stuff we are selling has continued to grow at a very large clip.”

The sale to Farfetch not only provides a major boost to the sneaker tech ecosystem, which is surprisingly much larger than those who aren’t familiar with it might have guessed, but its yet another successful e-commerce exit for Kirsten Green, the founding partner of Forerunner Ventures, who’s also backed Dollar Shave Club and Bonobos — direct-to-consumer retailers that sold for $1 billion and $310 million, respectively.

Stadium Goods founders John McPheters (left) and Jed Stiller.

Farfetch boarded the sneaker and streetwear hype train a while ago when it incorporated brands like Nike’s Jordan, pairs of which sell for more than $1,000 on the site. The company doubled down on sneakers earlier this year when it began integrating Stadium Goods products. After noticing high-demand, Farfetch founder and CEO José Neves tells TechCrunch, they began acquisition talks with the startup. Stadium Goods will remain independent as part of the deal, with McPheters and Stiller staying on to lead the brand forward. The company’s portfolio of shoes and apparel will be fully available on Farfetch’s e-commerce platform in the coming months.

“Luxury streetwear is a significant part of our business,” Neves said. “For many years now, we have had the largest collection of Off-White, for example, on the internet … What we did not have was the resale, secondary market. It was clear this was an interesting opportunity.”

Together, Farfetch and Stadium Goods will focus on international growth. McPheters tells TechCrunch Stadium Goods already had a significant international base of customers, but a partnership with Farfetch gives them the tools to go places they’ve never been before.

“In my mind, we are only just beginning,” McPheters said. “As more and more customers get comfortable with purchasing aftermarket items, we are going to continue to grow.”

The global athletic footwear industry is expected to be worth $95 billion by 2025. Meanwhile, sneaker resale is a $1 billion market and growing, fueled by a cohort of startups making it easier than ever for sneakerheads to locate rare shoes online and have them delivered to their doorsteps. That includes Stadium Goods, Flight Club, GOAT and StockX.

All four of these resellers, which ensure authentication of their products, are backed by VCs. Flight Club merged with GOAT earlier this year and together the pair raised a $60 million Series C. Before that, GOAT had brought in $30 million for its secondary market for collectible shoes from Accel, Upfront Ventures, Matrix Partners and more. StockX, for its part, has raised just over $50 million from Mark Wahlberg, Scooter Braun, Wale, Eminem, SV Angel and others.

According to Crunchbase data, VCs have funneled more than $200 million into sneaker startups in the past two years. Now, given the size of Stadium Goods’ exit, investment in the space will likely pick up significantly as other VCs hope to land an exit multiple that substantial.

Whether the reselling market will continue to expand is in question. Some have called it a bubble poised to burst, claiming it’s at its “height in popularity.” Why? Because corporate shoe brands like Nike and Adidas are keenly aware of the secondary market for their products and how they, too, can profit from it. If they decide to increase the supply of particular shoe models hot on the secondary market, they can radically disrupt the reseller economy. McPheters, however, says this doesn’t concern him.

“Brands need to strangle the demand to keep driving excitement in the space,” McPheters said. “They count on that hype to really move the needle.”

Bonobos and Nike get their own branded shops on Walmart’s Jet.com

Last year, Walmart acquired menswear site Bonobos for $310 million in cash. Now the retailer is adding the brand to a Walmart-owned website. A few days ago, Walmart opened an online shop for Bonobos on its Jet.com website, newly focused on serving urban shoppers, along with a dedicated shop for Nike apparel, footwear and accessories. […]

Last year, Walmart acquired menswear site Bonobos for $310 million in cash. Now the retailer is adding the brand to a Walmart-owned website. A few days ago, Walmart opened an online shop for Bonobos on its Jet.com website, newly focused on serving urban shoppers, along with a dedicated shop for Nike apparel, footwear and accessories.

The Nike shop is a part of the company’s strategic partnership with the brand, announced in September, and provides Nike with its own fully branded experience on the site. In addition to the Nike items for running, training and sportswear, Jet will become an authorized seller of select Nike and Converse products as a result of the deal.

Meanwhile, the Bonobos shop features fall apparel and other classics, including things like stretch-washed chinos, brushed button-downs, bomber jackets and Italian topcoats, the company says. These, too, will live in their own full-branded experience on Jet.com, and be available for two-day delivery across the U.S., with free returns.

This is the first time, post-acquisition, that Bonobos has been offered on a Walmart-owned third-party website, the company told TechCrunch.

Walmart has been busy establishing itself as a home to brands with their own dedicated followings, and often a millennial customer base. In October, it bought women’s plus-size clothing brand ELOQUII, in a $100 million deal.

The brand joined many others now under Walmart’s roof, including ModCloth, Moosejaw, ShoeBuy and Hayneedle, in addition to Bonobos.

Walmart, so far, had simply allowed the brands to continue to operate their own sites — but that changed in August when Moosejaw became the first of the acquisitions to open a digital storefront on Walmart.com. In that case, the new shop featured a curated selection of the brand’s outdoor gear — best sellers that appealed to Walmart’s mainstream customers.

The retailer is now doing the same with Bonobos.

The Jet.com storefront doesn’t include everything the brands sell, but rather a “curated assortment.”

For example, the Bonobos Jet.com store has just five jackets for sale today — but the Bonobos website features dozens in its Outerwear section. In addition to an expanded range of apparel, the brand’s own site offers accessories like ties, socks, belts, shoes, wallets and more.

Walmart brought Bonobos to Jet.com instead of Walmart.com because of the overlap in customer demographics — Jet.com is meant to appeal more to the young, urban shopper.

It relaunched its site in September with localized versions for various U.S. cities, and same-day grocery delivery, starting in New York. It also just added Blue Apron’s meal kits to its site — making Jet.com the company’s first e-tailer partner.

In addition to Jet.com’s focus on urban customers, fashion itself has become a key battleground between Walmart and Amazon, with each courting brands for partnerships and acquisitions.

In recent months, Walmart.com has become home to fashion brands’ own storefronts, having added Lord & Taylor to its site, for example. Amazon, meanwhile, has established partnerships of its own, including the recent addition of J.Crew, along with others like Chico’s FAS, Calvin Klein and Nike. However, its Stitch Fix try-before-you-buy service, Prime Wardrobe, focuses on its own in-house labels, which Amazon is rolling out at scale.

“Customers value trust more than ever and it’s important for retailers to have a clear point of view on what they stand for and who they choose to partner with. As we continue implementing our new strategy focused on the city consumer, we’re delighted to welcome Nike and Bonobos to Jet.com,” said Simon Belsham, president, Jet.com, in a statement. “Like Jet, both brands understand the importance of providing a great experience that customers can trust. Having a direct relationship with them both means we can offer a fully branded experience and a unique assortment of the brands’ leading pieces, which is important as we head into the holiday season,” he added.

Walmart continues M&A spree with acquisition of lingerie retailer Bare Necessities

Walmart has acquired online lingerie retailer Bare Necessities one week after its purchase of ELOQUII.

Walmart continues to beef up its portfolio of digital brands, announcing on Friday that it had acquired Bare Necessities, an online retailer of lingerie, swimwear, hosiery and other intimates.

Walmart declined to disclose the terms of the deal.

The lingerie company, founded in 1998, will operate independently of Walmart. Over time, the e-commerce giant says it will make Bare Necessities’ products available on Walmart.com, as well as on Jet.com, which Walmart acquired for more than $3 billion in 2016 to bolster its e-commerce business.

Walmart has long been one of the most active acquirers of startups and hasn’t slowed down in 2018. Just last week, the company announced it would purchase women’s plus-sized clothing brand ELOQUII. Before that, it paid $225 million for a grocery delivery service called Cornershop and earlier this year, it completed its $16 billion acquisition of Flipkart — its largest M&A play yet.

ModCloth, Bonobos and Moosejaw are other Walmart-owned brands, all of which were acquired in 2017.

In a statement, Walmart said Bare Necessities fit into its broader acquisition strategy of buying up “category leaders with specialized expertise and assortment that can help enhance the customer experience.”

As part of the deal, Bare Necessities co-founder and chief executive officer Noah Wrubel will continue to run the company alongside chief operating officer Bill Richardson. Wrubel will also take charge of the intimates category for both Walmart.com and Jet.com. Bare Necessities’ 170 employees will continue to run the business out of Edison, N.J., where the company is headquartered.

The global lingerie market is expected to bring in upwards of $60 billion in revenue by 2024, driven in large part by tech-enabled direct-to-consumer businesses’ e-commerce sales.