Member Exclusive   //   April 23, 2024

DTC Briefing: Express’s bankruptcy ensnares Bonobos

This is the latest installment of the DTC Briefing, a weekly Modern Retail+ column about the biggest challenges and trends facing the volatile direct-to-consumer startup world. More from the series →

When mall stalwart Express filed for Chapter 11 bankruptcy on Monday after months of speculation, it raised questions about the future of a former direct-to-consumer darling.

That’s because Express also operates Bonobos, a menswear startup co-founded by Andy Dunn. Bonobos launched in 2007 with the goal of helping men find better-fitting clothes with the help of fit guides. It took on a bombastic tone in marketing, pledging to eliminate the issue of “khaki diaper butt.” 

The current ownership structure of Bonobos is a little complex; brand management company WHP Global announced last year that it would buy the Bonobos brand for $50 million, but Express would also spend $25 million to acquire the operating assets and assume the related liabilities of Bonobos for $25 million. In the press release announcing its bankruptcy, Express did say it planned to close 95 Express stores, as well as all the stores for its athleisure brand UpWest. But, it appears Bonobos stores will remain untouched.

That deal represented a fall from grace for Bonobos, which has gone through numerous leadership changes over the past six years. In 2017, Bonobos was a trendy brand that was reportedly on track to bring in $150 million in sales that year, when Walmart swooped it up for $310 million. But in the years since then,  Bonobos has struggled to adapt to the casualization of menswear. Some analysts say that they also don’t believe that Bonobos has invested as much in new customer acquisition as it could, and under the ownership of two corporations, Bonobos hasn’t laid out a clear long-term growth strategy. 

Now, Express’s bankruptcy filing deals a further blow.

The numbers make it clear how Bonobos has failed to live up to its initial $310 million price tag. Bonobos is still growing, but not by much, and perhaps not as quickly as some would have expected it to over the past six years. 

Express had said that Bonobos was on track to do $125 million to $150 million in revenue during the second through fourth quarters of 2023. First-quarter sales are missing from that estimate because Express didn’t own Bonobos during the first quarter of 2023. But if Bonobos did around $150 million in sales during the final three quarters of 2023, that would likely mean Bonobos’ annual revenue is around $200 million — approximately $50 million higher compared to the ~$150 million in sales that Bonobos said it made in 2017. 

Neil Saunders, managing director of GlobalData Retail, believes that at least compared to its parent company Express, Bonobos “is a brand that is still working, and still has relevance and significance.” 

Still, he said that he thinks the brand “just hasn’t really put its foot on the accelerator in terms of customer acquisition. They have remained quite niche, and I think they are relying on their loyal customer.” 

Toeing the line of “selling out”
Part of Bonobos’s problem is that it was acquired during a time when strategic acquirers like Walmart were figuring out what to do with digitally-native brands. Much of the thinking at the time was that acquiring digitally-native brands could help large retailers figure out e-commerce. What was less talked about was what investments a company like Walmart would make in these DTC brands to help grow the brand long-term. 

In fact, at the time when Walmart acquired Bonobos, there was almost a fear from some long-time fans that Walmart would do too much to change the brand. Some customers went so far as to accuse the brand of “selling out.” 

In the years following the acquisition, new CEO Micky Onruval was careful to note in interviews how not much had changed. Rather than talking about all of the things Walmart was doing to grow the brand, much of the brand’s talking points were about how Walmart had not changed the culture of the brand. 

Walmart never sold Bonobos’s items through its website and never announced any plans to do so. Bonobos also operated independently, in tandem with a consortium of digitally-native brands that Walmart had acquired, like Modcloth and Eloquii.

But by 2019, the focus had shifted to cost-cutting, as some Walmart executives grew unhappy with how much money these digitally-native brands were spending. That same year, Bonobos went through a round of layoffs. In 2019, Walmart offloaded ModCloth, and in 2023, it sold Eloquii to holding company FullBeauty Brands.

Bonobos did make significant investments to grow the brand in those years. Under the ownership of Walmart, Bonobos went from around 35 retail locations (which the company calls “Guideshops”) to more than 60 locations. 

“I don’t think Walmart neglected the brand,” Saunders said, adding that the company “didn’t really have a grand plan to scale the brand. 

Although Walmart never publicly broke out Bonobos sales figures, the coronavirus pandemic also likely put a dent in the brand’s sales. Given that the brand’s core product was fitted attire for men, Bonobos had to figure out how to get men excited about workwear again during the work-from-home era. It ran a “back to business” campaign in September 2021 urging men to ditch their sweatpants. Onruval admitted to Adweek that “when we conceived it, we did think that more people would physically be returning to a workplace.” This thesis didn’t quite prove out. The following year, it ran a splashy TV campaign featuring comedian Nick Kroll. 

To Saunders, the core issue with Bonobos was that it didn’t respond as well as it could have to the fact that “the market for men’s apparel has become a lot more casualized.”

What’s more, Bonobos was only owned by Express for a short time before its new parent company filed for bankruptcy. Given Express’s precarious financial position over the past year, it didn’t have the time or money to invest in its new brand.

An evolving approach to DTC
On paper, Bonobos has done a lot of what DTC brands are told to do to succeed in this retail environment. It launched to solve a specific problem – one that, many analysts say, still exists today. It added wholesale partnerships and opened a significant number of retail stores to reach customers offline, in addition to online. It went beyond Facebook ads, investing in TV campaigns and experimenting with other offline marketing tactics like a college campus tour. 

The problem is just that it may not have invested significantly enough in these tactics. Andrew Lipsman, an independent analyst at Media, Ads + Commerce, said that Bonobos found itself in a similar position to many DTC brands over the years. 

When Bonobos launched, it was able to take advantage of low advertising prices on Facebook, given that it was a channel that not many brands were marketing through at the time. But then, as more companies embraced the digital ad market, ad prices went up, “making it more difficult to thrive in that environment.” Other companies have undergone similar challenges, like Casper and Everlane.

The DTC brands that have been able to make it through this turbulence and become more of a mainstream brand, “ultimately need to create cultural relevance,” Lipsman said. That is done by investing in a host of things, like reaching more customers through stores and investing in TV ads, while also responding to new customer trends. 

The challenge is that customers are fickle, and many companies like Bonobos haven’t been able to stay top of mind for consumers once they are no longer the hot new thing on the market.

Lipsman said that regarding DTC startups’ marketing strategies, “there has been some evolution, no doubt, but it seems more like tinkering around the edges versus doing something that is really going to drive enduring brand growth.”

How startups have shifted their approach to sustainability 

Earth Day was a big time for DTC startups to talk about their sustainability efforts on social media. While some startups still took drastic steps to highlight their commitment to sustainability — Peak Design, for example, shut down its website for the entire day — much of the focus was still on selling product. Allbirds released a “greenwashing” collection featuring pre-worn green styles. On, which has made a pledge to be completely fossil-fuel-free by the end of this decade, didn’t really talk about the occasion, instead using its social media pages to mainly highlight upcoming products. 

It underscores a big shift in DTC marketing over the last several years. Although many brands are still investing in sustainability practices, like using recycled materials when possible or even pursuing B Corp Certification, they are not leading with this message in their marketing.

There’s a growing recognition among DTC startups that sustainability alone doesn’t sell.

That doesn’t mean that startups are not investing in it. Ranjan Roy, the vice president of strategy at Adore Me, said that he views investing in sustainability as a “supply side problem.” That is, he said, many companies believed that investing in sustainability would be driven by consumer demand; consumers would only spend their dollars with companies that prioritized environmental efforts.

But that largely hasn’t borne out in practice, as evidenced by various surveys pointing to how shoppers who say they care about sustainability still shop at fast-fashion brands. 

Instead of brands leading with marketing, Roy expects that there will be more national and international policies unveiled that will force companies to improve their supply chains. He pointed to the Paris Accords as one example.

Adore Me wants to stay ahead of the curve; Adore Me is a certified B Corp and has developed its own internal measurement system — called the Adore Me Impact Matrix — that measures how sustainable certain products are based on a variety of factors like if an item uses recycled materials or organic fibers. According to this system, over half of the new products that Adore Me has produced that will be sold over the next year are sustainable. 

Ranjan said that Adore Me’s own internal research into the matter shows that when Adore Me posts about sustainability on social media, it typically gets low engagement but more positive comments. And, customers gravitate more toward certain topics than others. Messaging about carbon emissions typically receives more negative responses, he said, while messages about organic fibers or why a certain item is better for you typically get better responses. 

It gives a sense of what many DTC brands have discovered about sustainability: it sells when customers believe it leads to a higher quality product. 

What I’m reading

  • The Wall Street Journal has a deep dive into the internal turmoil at Nike, as morale has fallen after multiple rounds of layoffs, and the company is still trying to figure out the right balance between DTC and wholesale. 
  • Crocs has tapped Terence Reilly, previously the president of Stanley, to lead its Heydude brand. Before leading Stanley, Reilly was also the chief marketing officer at Crocs. 
  • Private equity firm The Carlyle Group has sold its stake in Beautycounter back to founder Gregg Renfrew.

What we’ve covered 

  • Men’s care brands like Manscaped and Every Man Jack are finding a home in TikTok.
  • After opening its first store last year, Kizik, which sells hands-free, slip-on shoes, is set to open three new stores this summer. 
  • Oura launches in Target, as health wearables are looking to attract more mass-market consumers.