By  on January 31, 2007

NEW YORK — Jones Apparel Group might have an alternative plan for Barneys New York up its sleeve.

Just when it seemed private equity might be swooping in to buy the upscale specialty retailer, an option being discussed and considered seriously by Jones executives is an initial public offering of Barneys.

Sources said Jones hasn't decided yet what to do — and no banker has been hired — but added Barneys chairman, Howard Socol, is said to be "keen" on the idea.

A Jones spokeswoman said, "Jones Apparel Group is focused on executing the strategic plans for all of our businesses, and building shareholder value by doing so. We do not comment on rumors."

Jones chief executive officer Peter Boneparth, not always the favorite of Wall Street analysts, "doesn't get enough credit," said an analyst, who requested anonymity, on Tuesday. The analyst pointed out that "buying Barneys for nearly $400 million in 2004 was a brilliant move. It now does at least $800 million to $900 million in annual volume. That's a tremendous amount of shareholder value created in two years."

The analyst called the prospect of a Barneys IPO "brilliant," adding that, "Peter has stock options that will vest in about a month, on top of the shares he already owns. That's an incentive to do an IPO.

"Besides, if the company does an IPO, they don't have to sell any of their businesses. And they get the upside of a Barneys IPO, value added to the Jones shares plus they get to retain control of the business," the analyst said, predicting investors in a tax-free spin-off would perhaps get one share of Barneys for every Jones share owned.

Another financial source said, "There's been talk about an IPO, which is a good option to consider. The company is running three businesses and not really getting any value for the businesses."

In addition to Barneys, Jones owns Nine West and such brands as Jones New York and Anne Klein.

Investment bankers and industry sources said last week that an IPO of Barneys would be a good move to unlock value in the retailer's assets. One former investment banker said luxury firms are still commanding good peer multiples because of the uniqueness of the assets. So, while a retailer might sell for between 1.2 and 1.6 times, a luxury retailer could get between 1.5 to 1.8 times sales. Barneys, this person said, could easily get a $2 billion valuation as a publicly traded company.

To Read the Full Article

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus