Saks Inc. has rejected a bid by The Bon-Ton Stores for its northern department store group, and will now try to sell the nameplates individually, financial and retail sources familiar with the negotiations said.
NEW YORK — Saks Inc. has rejected a bid by The Bon-Ton Stores for its northern department store group, and will now try to sell the nameplates individually, financial and retail sources familiar with the negotiations said.
According to those sources, Bon-Ton was the only bidder for the northern department store group, which includes the nameplates Carson Pirie Scott, Younkers, Herbergers, Bergners and Boston Stores. Retail sources said Bon-Ton's bid was rejected because of price. Saks sought $1.5 billion for the group, but the Bon-Ton bid, said to be in the $1 billion range, was far lower than the asking price.
Meanwhile, shares of Saks on Friday tumbled 9.84 percent in trading following the sale of a block of nearly 2 million shares by Morgan Stanley, according to several traders. The stock closed at $18.60, down $2.03, in Big Board trading, with 10.3 million shares trading hands compared with an average volume of just 1.9 million. Analysts and portfolio managers at several investment firms said there was speculation midday regarding the failed Saks/Bon-Ton negotiation.
A spokeswoman for Saks could not be reached for comment.
Sources said Saks and Bon-Ton were haggling over the price for the last few weeks, but that at the end of the day the "difference" between the ask/bid range couldn't be overcome.
A real estate contact specializing in the department store sector, who requested anonymity because he's worked with both firms before, observed, "Saks made the right decision in rejecting the bid. Bon-Ton [without an equity partner] really didn't have the money for it. Now it is a question of who is going to buy the pieces of the northern department store group, and who would be interested in the different locations."
William Susman, president and chief operating officer at investment banking firm Financo Inc., said, "In today's department store industry, as Federated Department Stores and May Department Stores demonstrate, it is an advantage to have scale. While ultimately the shopper will want to have a local option along with a national option, such as a J.C. Penney and Macy's, even though Macy's on a national front is still several years away, there are also strong regional players that exist, such as Lord & Taylor and Nordstrom. The brands in Saks' northern department store group, from an awareness positioning, are below the others, and should have less appeal."The northern department store group potentially could be rudderless in the next few weeks, since George Jones will be stepping down as president and chief executive officer of the division on Sept. 30. It was his resignation, in part, announced last month, that spurred expectations that Saks was close to inking a deal for the department store group.
Bon-Ton is believed to have made the bid on its own, since talks with other buyout firms to partner in the deal for the department store group supposedly fell through. As reported, Cerberus last month decided to drop out of the bidding process, one that would have teamed it with Bon-Ton for all of Saks Inc.
The lack of play over the department store group raises concern as to whether Saks Fifth Avenue could be sold, according to an analyst on the sell side.
"SFA's business has gotten worse, and it [risks] losing value as time drags on. No one really needs SFA. There are other attractive retail [plays], and the Lord & Taylor chain, which Federated is expected to sell at some point, could be more attractive than SFA," the analyst said.
While the mergers and acquisitions activity suggests a seller's market in general, the inability of Saks to get several deals to happen suggests that it is a buyer's market when questionable assets are involved.
A buy-side analyst for an institutional investor said, "Buyout firms don't have to buy SFA, or even the department store group. They have options, such as Linens n' Things Inc." This big-box specialty retailer has been working with Credit Suisse First Boston as its advisor to identify options, including the sale of the company.
Regarding bids for Club Libby Lu, a chain of 51 units catering to preteen girls, Forever 21 had the so-called inside track, and was expected to buy the chain among some retailers and real estate professionals. As reported exclusively on Tuesday, Forever 21 dropped out of the bidding process.
"Saks thought it could get $40 million for Club Libby Lu, which equals one times the revenue number. While the operation has potential, it is still so underdeveloped. A bid for even $20 million is one that [Saks] should have taken. When we looked at the business, one problem was that everything is connected with Saks Inc., which means whoever buys it will have to build a back office for the operation to handle accounts receivables and whatnot, and that takes a lot of money," said an investor who had once eyed the preteen chain, but elected not to participate in the bidding.Too Inc., another name said to be interested in the chain, also supposedly elected to pass on the bidding.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)