Karmaloop gets new owners, none named Kanye West
May 22, 2015 01:10 PM
Financially troubled online streetwear retailer Karmaloop.com has new owners that don’t include rap superstar Kanye West, who was rumored earlier this year to be a possible buyer. Soon, the retailer will also have a new CEO.
Private investment firm Comvest Partners and finance company CapX Partners announced plans to buy Karmaloop, No. 152 in the Internet Retailer 2015 Top 500 Guide, for $13 million. The sale is expected to close in early June. As part of the deal, Karmaloop CEO Greg Selkoe will move into an advisory role with the company and will be replaced as CEO. The retailer expects to announce a new CEO next week.
Karmaloop filed for Chapter 11 bankruptcy protection in March, citing assets of $10 million to $50 million against liabilities of $100 million to $500 million. Selkoe told Internet Retailer that a string of bad e-commerce investments, including video production arm Karmaloop Media and women’s fashion e-commerce site MissKL.com, were to blame for the company’s financial troubles.
“I certainly take responsibility more than anyone that these businesses didn’t ultimately bear fruit,” Selkoe told Internet Retailer in March. “I certainly feel it’s been a tough experience and I’m the type of person that doesn’t like letting customers down. You’ve got to be resilient and you’ve got to just keep going.”
Selkoe said at the time that sales for the youth-oriented retailer were strong, and Top500Guide.com data appears to confirm that. In 2014, Karmaloop earned an Internet Retailer-estimated $216.3 million in web sales, up 5% from $206 million the previous year. Its audience is predominantly consumers under the age of 34 (59%) who have an average annual household income of $60,000 or less (60%).
Comvest partner Robert O’Sullivan says his firm has big plans for the online retailer.
“The loyal, dedicated Karmaloop customer base will see, over the coming months, new initiatives dedicated to forging a strategic growth path while retaining and building on the essence of the Karmaloop brand,” he said in a statement.