Chico’s FAS (CHS) is reportedly mulling a sale to private equity, a potential multi-billion dollar deal that would result in another women’s retailer exiting the public market.
The possible deal, reported by the Financial Times citing people familiar with the situation, could be one of the largest take-private transactions so far in 2014. One industry source said Chico’s would likely command a premium of about 30%, the Financial Times reported. A Chico’s representative wasn’t available to comment on the takeover speculation.
Shares of Chico’s, which once traded at just under $50 in 2006, have more recently languished under $20 in recent years. The company currently has a market capitalization of about $2.36 billion.
Chico’s, which operates four brands including the namesake store and White House | Black Market, has reported consistent annual profits in recent years even as some of its rivals have struggled. Many players in the sector of retail that caters to older women have found themselves out of fashion with their target audience. For example, Talbots was acquired in 2012 by private-equity firm Sycamore Partners for only $369 million, including debt, while Coldwater Creek landed in bankruptcy earlier this year.
But Chico’s reported about $2.59 billion in sales for the latest fiscal year, up just 0.2% but extending a years-long streak of growth. Chico’s results have been bolstered, in part, by new store openings. The company operated 1,472 retail stores as of Feb. 1.
For the latest quarter ended May 3, Chico’s overall sales increased 1.6% due to new store growth, while sales at existing locations fell 2.6%. Chico’s, like many retailers, said results were hurt by lower traffic and higher promotions due to poor winter weather. But the retailer struck a more bullish tone about sales for the rest of May, saying preliminarily results signaled growth.