Women's Retailer Modcloth To Be Bought By Jet.Com, Which Is Owned By Walmart

By Anna Merlan | March 15, 2017 | 4:00pm

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Modcloth, a women’s online fashion retailer known for quirky, indie-inflected clothes, will be acquired by Jet.com. Jet is, in turn, owned by Walmart. “It was explicitly stated that starting Friday paychecks come from Walmart,” a current employee told us. Current employees received offer letters from Walmart Wednesday morning.

Modcloth employees were gathered this morning for an all-hands meeting, a recording of which was provided to Jezebel. CEO Matthew Kaness told the room that the company had been acquired by Jet.com, prompting an immediate, audible rustle of dismay from people in the room who understood who their parent company is: Jet, an online shopping site for household goods, was acquired by Walmart in August.

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“This is news that hasn’t been shared with the public yet,” Kaness added. “I ask that we keep this within the company, as we usually do.” The news is set to be announced publicly on Friday. The actual closing of the deal is set for Thursday.

Modcloth always branded itself as a hip, quirky, independent retailer for smart, bookish girls; being acquired by a mega-corporation best known for union-busting and underpaying their workers is, to say the least, ironic. (After years of protests, Walmart gave its employees a raise in February 2016, from $9 to a whopping… $10.) Modcloth won praise from us in 2014 for doing a particularly good job selling plus-size clothing; Walmart got in trouble the same year for featuring a collection of what their website called “fat girl costumes.” (In a statement on Twitter, the company later said, “This never should have been on our site. It is unacceptable, and we apologize.”)

Modcloth is frequently praised by sites like Cosmo for being “feminist AF” in its approach to fashion. Founder Susan Gregg Koger has been vocal about her support for issues like equal pay and equal representation in the workplace. On International Women’s Day, she wrote a blog post explaining that much of the company was participating in the women’s strike:

On Wednesday, you may notice that things are a little slower around here. That’s because some of the ModCloth team, myself included, are participating in the International Women’s Strike.

I am both excited and proud to stand with my sisters from around the world in “recognizing the enormous value that women of all backgrounds add to our socio-economic system–while on-average receiving lower wages and experiencing greater inequities, vulnerability to discrimination, sexual harassment, and job insecurity.”

As the founder of a business that sells to and employs women (in fact, 64% of our workforce is female), it has always been important to me that ModCloth supports women, too. That is part of why the “gender pay gap” is a deeply personal issue for me.

Walmart was sued for employment discrimination on the basis of gender in 2011. The case, Walmart v. Dukes, eventually went to the Supreme Court; lawyers for the plaintiff Betty Dukes had attempted to make the case a class action suit, with a proposed class of 1.6 million women who were current or former Walmart employees. (The Supreme Court ruled that the suit did not meet the requirements for class action in its then-current form and sent it back to a lower court).

Things have been difficult at Modcloth for some time: the current employee told us that in the past two and a half years, the company has gone through six bruising rounds of layoffs, which became so common they were referred to by employees internally as “reapings.”

Gregg Koger, the founder, always used her chubby pug Winston as a company mascot; he was featured on the website and employees were given his birthday off every year. In a particularly crushing development, symbolism-wise, Winston died in February.

Kaness tried to present the news as exciting by saying that the move allows the company to grow, which it undoubtedly does. He added that “culturally” Modcloth is a lot like Walmart.

“When I think about the quality of people I‘ve met at Jet and their ambitions and how it aligns with ours,” Kaness began. “And when when I think about their parent company Walmart, who has the resources—but also has when you’ve spent time researching it and understanding it, they’ve spent a lot of time working on corporate responsibility and environmental initiatives and opportunities for their employees and their careers. I think there’s a lot of overlap culturally with what they’re about and what we’re about. I think over time this is going to become an incredible marriage.” In the recording we heard, employees in the room can be heard laughing in what sounds like disbelief.

Jezebel has contacted Modcloth, Jet, and Walmart for comment and will update if we hear back.