This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

The Deal: Jones Group, or Buyers, May Entertain Sale of Its Parts

And at $1.1 billion, Apax Partners' deal to acquire rue21 (RUE) this year for nearly 10.9 times the $101 million in EBITDA it generated for its fiscal year ended Feb. 2 was one of the richest, proof that lucrative deals for mature brands are possible.

In contemplating a high multiple, Sycamore could be hoping to leverage the experience of its grizzled retail veteran Stefan Kaluzny to ring operations savings out of the troubled clothing conglomerate, and sell off underperforming parts of it in the process, while holding on to its higher-margin footwear and accessories businesses of brands such as Stuart Weitzman, Kurt Geiger and Nine West.

Or perhaps Sycamore and KKR will simply split the spoils, with Sycamore taking the apparel brands, an area in which it has the most experience, and KKR owning the footwear and accessories business.

Holding onto the most valuable brands and selling the underperformers would be a similar play to Sun Capital Partners' 2007 $762 million acquisition of St. Louis-based apparel conglomerate Kellwood in July, the jewel of Kellwood's portfolio, contemporary clothing brand Vince, filed for an IPO. At the same time, Sun Capital divested itself of BLK DNM, Baby Phat, Phat Farm, Zobha and Adam, while focusing on its high-growth businesses, including women's contemporary apparel brand Rebecca Taylor, women's luxury wear brand David Meister and women's urban wear brand XOXO.

Remaining brands in Kellwood's portfolio that could have a sale tag on them include women's apparel brands Sag Harbour, Jax, Briggs New York, Rewind, Democracy, My Michelle, Sangria, and Jolt.

Likewise, Jones Group divestitures, whether they come before or after a leveraged buyout, could include its Jones New York dress and suit business, as well as its denim business, not to mention its Anne Klein apparel brand, according to people familiar with the situation.

In 2011, Jones Group was near a deal to sell its denim business to Delta Galil Industries for about $350 million, but after sales at the division dropped by double digits, Israel-based Delta Galil canceled the transaction in January 2012.

The pressure to sell brands came from activist investor Barington Capital Group. According to news reports, however, Jones Group chose instead to put the whole company on the block.

Prior to Barington's moves on the company, Jones Group was attempting over the last few years to improve earnings by acquiring footwear and accessories brands. Those deals included the acquisitions of footwear and accessories businesses Stuart Weitzman Holdings LLC and Kurt Geiger Ltd., both complementary to its Nine West footwear brand.

Written by Richard Collings.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
JNY $14.99 0.20%
AAPL $110.77 2.80%
FB $88.80 1.80%
GOOG $608.76 1.80%
TSLA $243.93 2.20%

Markets

Chart of I:DJI
DOW 16,255.37 +197.02 1.23%
S&P 500 1,931.44 +17.59 0.92%
NASDAQ 4,689.7970 +53.6920 1.16%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs