Ian Ritter is national online editor of GlobeSt.RETAIL.
BURLINGTON, NJ-Burlington Coat Factory Warehouse is "exploring possible strategic alternatives for the company to enhance shareholder value," says a statement released by company executives. The 362-store chain has retained Goldman Sachs & Co. to explore a possible transaction.
It is a good time for the company to sell, points out retail analyst Howard Davidowitz, chairman of Davidowitz & Associates, a New York City-based retail consulting and investment firm. Monroe Milstein, the retailer's chairman and CEO, is 78 years old and likely wants to get his estate in order, Davidowitz surmises.
The company has also had successful financial quarters of late, compared to a few years of tough competition from retailers like TJX Cos. and Ross Stores. "This is the peak time to sell," he says. "The stars are aligned perfectly."
In its latest reported quarter, which ended May 29, the retailer posted sales of $757 million, an 11.6% increase from the same year-ago period. Same-store sales during the quarter were up 7.9%.
Plus, there are a many private equity firms looking to buy retail assets, Davidowitz says. "Whoever gets it is going to get a very powerful portfolio of real estate," he says.Recent deals have included Texas Pacific Group and Warburg Pincus LLC's deal to acquire Neiman Marcus for $5 billion, as well as the $11.3-billion purchase of Toys "R" Us by Bain Capital, Kohlberg Kravis Roberts & Co. and publicly traded REIT Vornado Realty Trust.
Burlington's shares have risen more than 15%, to nearly $42 after the company's announcement. Davidowitz predicts that the company will trade hands for $5 to $6 more per share.
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