DSW is closing Ebuys, the parent of e-Commerce sites ShoeMetro and ApparelSave. DSW acquired Ebuys in February 2016 for $62.5 million in a bid to expand online and internationally, but the purchase has proved to be more of a burden than an asset, according to MarketWatch.
The retailer wrote down the value of Ebuys on its balance sheet by $52.7 million in Q3 2017 after taking a loss due to markdowns made to clear inventory. DSW evaluated strategic alternatives for Ebuys, including a sale, but ultimately decided to complete a liquidation process within the coming months. The company will book one-time charges related to the exit.
“The challenge of sourcing the right merchandising in a sustainable way and the requirements to scale the business entails unacceptable economics in the near term,” said Jared Poff, CFO at DSW in a conference call.
DSW derived useful insights from Ebuys despite the platform’s lack of financial success, which will help the retailer bolster its digital platforms, according to Poff. The number of monthly active users on the DSW mobile app has grown nearly 5X over the past year, as the retailer saw its strongest growth in digital demand in the last nine years.
The retailer recorded an overall strong performance for Q4 2017, with sales growing 6.7% to $720 million. FY 2017 revenue hit a record high of $2.8 billion on three consecutive quarters of positive comparable sales.