NEW YORK — Casual Corner is getting closer to being sold and a deal might be announced by the end of July, financial experts said.
The 1,000-store women’s specialty chain owned by Retail Brand Alliance was put on the auction block in September 2004. RBA appears to be nearing a deal that involves a public company that is a retailer and may join with a liquidator, said the financial sources, who asked not to be named. The identities of the potential buyers could not be determined.
“I don’t comment on rumors,” said Claudio Del Vecchio, RBA’s president and chief executive officer. “We are always out on the market looking for an acquisition or to sell a part of our portfolio.”
Gilbert Harrison, chairman of investment bank Financo Inc., RBA’s adviser, said, “It is not the policy of the firm to comment on any transactions that have not been announced.”
Alan Cohen, chairman of Abacus Advisors Group, said, “Liquidators do financing and liquidations [from real estate leases to inventory], but many also look at these opportunities for investment and some also provide the financing going forward.”
Investment bankers said Tuesday that the timing was right for a sale, particularly since retail has had intense focus recently from both strategic and financial players.
The $5.1 billion leveraged buyout deal for Neiman Marcus Group by two private equity firms, Warburg Pincus and the Texas Pacific Group, is to close in November. The high-yield debt financing portion of the deal is still being arranged, people knowledgeable about the situation said.
Saks Inc. is to close July 5 on its agreement to sell the company’s Proffitt’s and McRae’s stores to Belk Inc. for $622 million in cash, plus the assumption of about $1 million in capitalized lease obligations. The 47 Proffitt’s and McRae’s stores are located throughout the Southeast.
When Casual Corner was put up for sale in September, the price was considered a bargain in the $250 million range, derived from a calculation of the company’s sales per square foot. Sources said then that sales per square foot were around $200, but should be $350 to $500.
In addition to Casual Corner, RBA operates Brooks Brothers, Adrienne Vittadini and Carolee Designs. Carolee Designs, which a source close to the operation said is “doing very well, the best it’s ever been,” is also being marketed for a sale. Del Vecchio declined comment.
The Casual Corner Group closed its 84-unit August Max chain in August 2004, which prompted questions about RBA’s plans for Casual Corner.
The chain targets the misses’ category and still has strong brand loyalty, but profitability has been an issue. The retailer, which targets the middle of the market, has been operating in a difficult retail environment and faces issues that are similar to those of many competitors. A person close to the company, which does not disclose the volume at its different divisions, said that the “numbers at Casual Corner lately have been improving.”
With the numbers getting better, the attraction of Casual Corner for a strategic buyer is flexibility, the ability to snap up 1,000 stores in a single transaction, as well as the option to take some of those stores for conversion into other nameplates.