Blog: All change at J Jill, Filene's, Arcandor
Leonie Barrie | 15 June 2009
US women's wear retailer The Talbots has finally found a buyer for its J Jill brand, with a US$75m deal agreed with an affiliate of private equity firm Golden Gate Capital last week. The sale price falls way short of the $517m paid by Talbots for the chain just three years ago, and will lead to the closure of 75 of its 204 stores.
But crucially, it now leaves Talbots free to focus on the turnaround of its core business without the distraction of a second drain on its finances.
That said, progress is likely to be slow. Just days after announcing the J Jill sale, Talbots unveiled plans to cut its workforce by a further 20% after swinging to a first quarter loss of US$18.8m, but said it was making “steady progress” on its turnaround. Sales were down 26.2% to $306.2m, although they were in line with expectations.
Meanwhile, confusion still surrounds the auction selling off the assets of bankrupt cut-price retailer Filene's Basement. Men's Wearhouse affiliate K&G Acquisition Corp had been named as the winning buyer for the retailer's assets, but the process was forced to re-start again after complaints from the losing bidders.
Men's Wearhouse had offered a total of US$67m for 17-20 Filene's Basement stores, assorted inventory, the company headquarters and a distribution centre, plus its trade name.
Details of the mix-up came as the retailer and tuxedo hire specialist beat forecasts with a first quarter profit of US$5.3m – although this was 46.6% below last year's figure as sales fell 5.5%.
Retail and travel group Arcandor AG, owner of Germany’s largest department store chain, has also reached the end of the line – filing for bankruptcy protection after the German government rejected pleas for state aid to help repay loans of EUR710m (US$1bn).
The company says it will continue an ongoing restructuring programme while in administration, although industry observers believe the stage is now set for a break-up and sale of its assets, including department store chain Karstadt and mail-order business Primondo. Suppliers including Li & Fung have admitted they will be affected by the process.
In contrast, fast fashion retailer Inditex appears to be bearing up well in the downturn. Despite posting a 16% slump in first quarter net profit thanks to a slowdown in consumer spending in Europe, it reported resilient clothing sales in May and the first week of June. The operator of the Zara clothing chain said sales during May were up 9% on last year.
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