It looks like private-equity firms are ready to spend on retail and are now circling Saks. A consortium is reportedly eyeing the luxury department-store chain for $1.7 billion.
The supposed offer, from a venture of US and UK groups, equates to $11 per share. After the rumors hit yesterday, Saks stock climbed more than 20%, in the $9 range.
One of Saks' main rivals, Neiman Marcus is already private, which got snapped up by private equity in 2005 for $5.1 billion. Of course, those were different times.
For its part, Neiman, with about 40 full-line stores, seems to be holding up pretty well as of late in the sales department. Same-store sales were only down 0.1% in the last year, and they rose 6.5% during its most recently ended quarter.
Saks, with about 50 full-line units, announced the recent closure of two stores. Saks is also doing OK in the sales department with a recent Q2 4.6% gain, but it is still losing money, while Neiman is turning a profit.
Would a sale of Saks give the retailer an operational boost? And if so, would a lot of store closures need to take place?
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