Chico’s to Acquire Boston Proper
All Cash Deal Said to be for $205 Million
Based in Boca Raton, Florida, Boston Proper is a leading catalog and internet retailer. With recent growth in revenue of 13%, the privately-held company is expanding and capturing the essence of its Misses line of apparel. The acquisition is perfect for Chico’s FAS Inc., as it is the dominant retailer of the Misses Category. With three brands already under their belt, the Chico’s namesake label, White House I Black Market, and Soma, the company is expecting to expand its marketshare by purchasing Boston Proper in an all-cash deal that is expected to be finalized by the end of September. Headquarted just 3 hours away in Fort Myers, Florida, the company believes that by obtaining the label, they will be better positioned to flourish and to extend its already solid offering to the overlapping customer base.
David Dyer, President and CEO of Chico’s, trusts that growth is available beyond its current stance in the market. With hard economic times, their brands have continued to do well compared with trendier ones- due to their consistent customers who rely on paying for quality. After the expected purchase, Boston Proper will be operated as a stand -alone division under its current CEO, Sheryl Clark. Clark thinks that by attaining the label, Chico’s is“ fill[ing] a void between the two brands.” Dyer also stated that “Boston Proper has grown and thrived by offering women daring, modern fashion with a sensual feel through compelling catalogs, direct marketing campaigns and its on-line channel.” He also reaffirmed his stance stating that the “whole thing is about growth.”
The corporation shocked the market by providing great numbers during their second-quarter. Sales surged 18% which exceeded expectations, jumping from $537.6 million to $551.4 million. Gross Same-store sales rose 12%, profit thrived to 47%, and beat to presumptions by raising the stock by 0.25 cents a share. After the possible acquisition was announced, Chico’s shares dropped more than 3%, however rivals were also down. Although the company witnessed a drop, it is usual to have speculation during a buyout.
Chico’s is hoping to experiment with its new enterprise by opening a few pilot stores and expanding the brand from direct-to-customer to having a personal interaction with customers. They are also expecting to improve the company’s marketing, circulation, and sourcing within the first few months of the transaction. The deal is expected to increase Chico’s profits within the next few quarters. By capturing a major segment in the Misses category and providing growth within the corporation, the buyout will certainly help the company continue to dominate.
By Samara Freschman