It looks like Sycamore Partners is best-positioned to prevail in the battle for Belk Inc.

Sources said the fashion-focused private equity firm made a strong pitch to invest in the regional department store, potentially valuing it at as high as $3.5 billion. Other big money investors Bain & Co. and KKR, which were also in talks with the company, have dropped out or are seen as less engaged in the process. All of the parties either declined to comment about the process or did not immediately respond to queries.

That leaves it up to the chairman and chief executive officer Tim Belk and the rest of the Belk family to decide how they want to proceed.

“The family has to figure out what they want,” said one source. “The question is, does the family keep a minority stake? This could play out in a lot of different ways. I don’t think it’s necessarily a whole-company deal when we’re done. What does the family want to do and at what price?”

Another source noted that Belk is technically a public company so the process involves a number of steps that have taken longer than some initially expected. Belk has roughly 850 shareholders, with the majority of the stock controlled by the Belk clan.

The 297-door chain in April said it hired Goldman Sachs as part of an open-ended strategic planning process that could involve the sale of the company.

Belk owns about a quarter of its stores and saw sales inch up 1.8 percent to $4.11 billion last year, as investments in stores, e-commerce and infrastructure cut profits by 7.8 percent to $146.1 million.

Sycamore has more than $3.5 billion under management and a seemingly ever-expanding portfolio that already includes Hot Topic, Talbots, Coldwater Creek, Kurt Geiger, Nine West and more. In May, the company agreed to buy 330 Family Dollar stores with a total of $500 million in sales with plans to operate them under the Dollar Express banner.

Belk would stand out to some degree in Sycamore’s portfolio, not only because it would be one of its biggest deals yet but also because Sycamore’s  portfolio includes a number of retailers that were troubled when they were acquired and are still trying to find their footing.

“Belk is basically a relatively small [for a department store retailer], but relatively well-run company,” said Craig Johnson, president of Customer Growth Partners.

Department stores in general, though, have seen better days — at least in his view.

“This is not a fast-growing area of the retail economy,” Johnson said. “It’s a mature concept. You go back a generation ago and department stores had 8 or 9 percent of the overall retail market. It’s now only 1.9 percent of the overall retail market, leaving out autos and gasoline and restaurants.”

Johnson said it was unclear how Sycamore would seek to “dramatically enhance operations of a regional player like a Belk.”

“If it’s a pretty good company to begin with, what are these guys going to do to really ramp up the operating performance, especially when they have a pretty full plate of troubled companies?” he wondered. “What’s the source of value-add? Is it all real estate or is there is some other secret sauce in there?”

That remains to be seen.

But this wouldn’t be the first time that Stefan Kaluzny, Sycamore’s managing director, saw value or some opportunity where others didn’t.

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