(Reuters) — Private equity firm Sycamore Partners is in talks with regional discount store operator Fred's Inc. about a potential takeover, according to people familiar with the matter.
The talks are at an early stage, the people said, cautioning that no bid may surface. There is at least one other party in talks with Fred's, two of the people said, without disclosing its identity.
The sources asked not to be identified because the talks are confidential. Sycamore, which is led by retail veteran Stefan Kaluzny, declined to comment. Fred's did not immediately respond to a request for comment.
Memphis-based Fred's, which has a market capitalization of around $600 million, said in January it had hired financial advisers Bank of America Corp and Peter J. Solomon Co to explore strategic alternatives after weak holiday sales.
Shares of Fred's had fallen nearly 20 percent since the beginning of the year. They jumped more than 10 percent on Thursday on news of the talks with Sycamore.
Founded in 1947, Fred's sells discount merchandise in 700 locations around the southeastern United States and operates pharmacies within its stores. Most of its locations are in towns with populations of 15,000 or less.
Its competitors include Dollar General Corp, Family Dollar Stores Inc. and Dollar Tree Inc.
Fred's total sales for the first five months of fiscal 2014 were $840.9 million, roughly flat compared with the same period last year.
A takeover of Fred's would represent a new strategy for Sycamore, which until now has invested solely in apparel and footwear companies, including Aeropostale Inc., Coldwater Creek, Hot Topic, Jones New York and Talbots. It is also attempting to take over women's apparel retailer Express Inc.
@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)
@heriethpaul and @gracebol have a moment on the @victoriassecret fashion show 2017. See every look from the runway on WWD.com. Link in bio. (📷: @giovanni_giannoni_photo) #wwdfashion #victoriassecret #VSFashionShow
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia