Fortunoff is up for sale again.
This story first appeared in the January 21, 2009 issue of WWD. Subscribe Today.
Just 11 months after purchasing the jewelry and housewares chain, NRDC Equity Partners has decided to sell the business and is focusing talks on one potential buyer, sources said Tuesday.
The identity of the potential buyer could not be learned. One source close to NRDC said a deal could be announced within a couple of weeks, but there is no guarantee.
NRDC declined to comment Tuesday.
While the market for mergers and acquisitions has virtually dried up in the recession, NRDC did purchase Fortunoff inexpensively, paying just $110 million for the $439 million chain, making it easier to unload. The $110 million included the $80 million purchase price and $30 million in debt and other obligations. Fortunoff is a well-known brand in the metro New York area but has seen little growth in recent years and has been particularly hurt by last year’s collapse of the housing market.
NRDC is eager to sell Fortunoff, which it considers a distraction from its major retail holdings — the Hudson’s Bay Trading Company, which includes The Bay, Zellers, Home Outfitters and Fields divisions all in Canada, representing $7 billion in volume, and Lord & Taylor in the U.S., representing about $1 billion in volume. The retail industry in Canada is not struggling as much as it is in the U.S.
When it bought Fortunoff, NRDC said it could roll out Fortunoff jewelry and home shops with bridal registries inside Lord & Taylor, which it purchased in 2006. Fortunoff jewelry shops would have replaced the leased jewelry shops currently operated by Finlay. The deal with Finlay is set to expire at the end of this month, but negotiations are under way to extend the agreement. If Finlay doesn’t stay at Lord & Taylor, it’s possible NRDC seeks another operator for the jewelry departments or operates them on their own.
Speculation on Fortunoff’s future mounted this week when NRDC disclosed a major centralization strategy for its Hudson’s Bay Trading Company retail operations, and excluded Fortunoff from them.
NRDC purchased Fortunoff from Trimaran Capital Partners, an equity group that along with K Group, another private equity firm, bought Fortunoff in 2004.
Fortunoff was founded in 1922 in Brooklyn as a neighborhood housewares store by Max and Clara Fortunoff. That first unit led to eight stores in the borough. The Fortunoff’s son, Alan, served as president and chief executive officer until his death in July 2000.