After weeks and weeks of wrangling over price, Saks Inc. agreed to sell its northern department store group to Bon-Ton Stores Inc. for $1.1 billion in cash, plus about $85 million in liabilities, leaving only the $30 million Club Libby Lu tween specialty chain still on Saks' official "for sale" list.
While speculation continues that Saks might also sell its $2.7 billion Saks Fifth Avenue Enterprises, it's believed management, for now, wants to focus on trying to turn around the luxury business after a particularly difficult 2005, and that it would not seriously explore a sale until next year at the earliest.
"I don't ever comment on hypothetical transactions. That is my policy," said R. Brad Martin, chairman and chief executive officer of Saks Inc., in an interview Monday.
Robert Buchanan, analyst with A.G. Edwards & Sons Inc., said in a research report that there is a "remote possibility that Brad Martin and the rest of the Saks board would eventually opt to sell the remainder of Saks [SFA, Off 5th outlets and Parisian]. In that event, the possibility of which we put at less than 20 percent, SKS common could perhaps rise above the current stock price, but again, we doubt that such a deal gets consummated, with SKS management having given no strong indication that it intends to sell the remainder of the business."
"If lackluster operating results continue at SFAE, we believe the division may be put up for sale in 2006," said Deborah Weinswig, broadlines retail analyst at Smith Barney, in a research note.
According to a research note from Todd Slater at Lazard Capital Markets: "We believe that the sale of SKS' southern and northern department store assets will presage movement on its remaining two largest assets, Parisian and Saks Fifth Avenue. Although Saks has not officially marketed these chains, both business are, in our opinion, positioned to sell quickly once returns on investments begin paying off."
Slater wrote in his note that Saks Inc. stock could be worth around $25 a share, with margin improvement. On news of the deal Monday of the sale of the northern group, Saks' stock leaped 9 percent, or $1.49, to $18.45, while Bon-Ton soared 20 percent, or $3.39, to $20.05.
Hermès is launching a Laundromat pop-up shop in NYC - dubbed Hermèsmatic - where customers can bring their old scarves to be dip-dyed by an expert. Get all the details on WWD.com. #wwdnews (📷: @donstahl)