Shares of Syms Corp. soared more than 27 percent Thursday after the off-price retailer known for its fondness for educated consumers said it had begun to explore strategic options.
This story first appeared in the May 27, 2011 issue of WWD. Subscribe Today.
Syms said it has “initiated a process to explore and evaluate various potential strategic alternatives, which may include a possible sale of the company.” In addition, Syms said it hired Rothschild Inc. as its financial adviser to assist in the process. The company said there was “no defined timetable” for the review.
According to a credit source, Alvarez & Marsal, the consultancy that specializes in restructuring, earlier this month completed a project for Marcy Syms, the firm’s chairman, president and chief executive officer. An Alvarez & Marsal spokeswoman didn’t return a call requesting comment.
Syms acquired Filene’s Basement, now a wholly owned subsidiary, in a bankruptcy court auction in 2009. It operates 47 off-price stores under the Syms and Filene’s Basement nameplates, including five co-branded Syms/Filene’s Basement stores.
Sy Syms founded the firm in 1959. Marcy Syms, his daughter, succeeded him as ceo in 1998 and became chairman upon his demise in 2009.
Marcy Syms declined comment. She and affiliated entities control 55.1 percent of the company’s stock. Shares Thursday closed at $9.49, up $2.04, or 27.4 percent, boosting the value of the ceo’s holdings $16.3 million to $75.6 million.
The company has a sizeable real estate portfolio and owns its flagship at 42 Trinity Place in downtown Manhattan and, including ground leases, 17 other locations. The lease on the store at 400 Park Avenue in New York is due to expire late this year or early in 2012, and a financial source said the firm has contemplated exiting that location. An investor said shareholders have pressured the firm to sell some of its real estate holdings.
In the fiscal year ended Feb. 26, its first including 12 months of Filene’s figures, sales rose 18 percent to $445.1 million as same-store sales were flat and gross margin rose to 39 percent of sales from 38.5 percent in the prior year. However, the company, hit with $4.3 million in pretax asset impairment charges, amassed a net loss of $32.9 million versus net income of $8.3 million in the prior year, when it recorded pretax gains of more than $34 million stemming from life insurance proceeds following Sy Syms’ death and the bargain purchase of Filene’s.
According to the firm’s annual report, 46 percent of its business is women’s and 38 percent men’s, with the balance split between children’s apparel, luggage, home, fragrances and shoes. The company estimated in the regulatory filing that “900 designer and brand-name vendors are represented in its stores.”