Chico’s FAS Inc owns brands including White House Black Market, Soma and Chico’s and has existed in the US since the early 1980s. As of July 2023, the retailer operates out of 1,258 boutiques and outlets throughout the US and has an online platform for each of its brands.

Inside the Sycamore Partners-Chico’s FAS deal

In 2001 Chico’s FAS debuted on the New York Stock Exchange and the retailer was named one of Fortune’s 100 fastest-growing companies, BusinessWeek’s 100 Best Small Companies, and the number one spot on Forbes’ 200 Best Small Companies.

Two years later it acquired White House Black Market and the following year (2004), it launched Soma, an intimate apparel boutique. In 2014 Chico’s FAS launched in Mexico as a franchise business.

Over a 30-year period the company has evolved into a successful enterprise with a visible omnichannel presence in the US. And some might agree it is unsurprising it has been targeted for acquisition.

But it’s not the first time Sycamore Partners has had its eye on Chico’s FAS.

In 2019, Sycamore Partners proposed an offer to acquire Chico’s FAS for $3.50 per share. The Chico’s FAS board unanimously rejected the unsolicited proposal which it said “substantially undervalues” the company.

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It came just after Chico’s FAS slid into the red for the fourth quarter of 2018 and just ahead of a strategic leadership shakeup which saw Molly Langenstein appointed president of the apparel group and Bonnie Brooks named CEO. The leadership shakeup aimed to strengthen the organisation, create clear lines of responsibility and accelerate sales-driving priorities.

A year later, Langenstein took the reins of the company in a second major leadership restructure. At the time, Chico’s FAS said the new leadership appointments were the result of a planned succession “designed to strengthen and provide ongoing stability and continuity to the business.”

And the moves seem to have paid off with Chico’s FAS booking a profit of $109m compared with $46m a year earlier in its most recent set of full-year results.

Operating income grew to $142.1m from $66.6m while net sales hit $2.1bn up from $1.8bn for the same period a year earlier.

CEO Langenstein, who industry experts believe is integral to the firm’s success, put the stellar set of results down to strong store and digital sales growth, substantial gross margin expansion and solid expense leverage for the year.

And it would appear holding out for a better offer has paid off for Chico’s FAS with Sycamore Partners shelling out $7.60 per share which stands at a 65% premium when compared to the company’s closing stock price on 27 September 2023.

The $1bn deal will see Chico’s FAS delisted, and Langenstein is confident that the investment will allow it access to “additional expertise, financial resources and strategic flexibility to fuel the growth of its company and three powerful brands: Chico’s, White House Black Market and Soma.”

Here’s why the deal matters

Sycamore Partners has made 23 acquisitions across several sectors, with at least four acquisitions in apparel brands and retail chains, according to

Some of the brands it owns include Loft, Ann Taylor and Lane Bryant which it acquired from Ascena Retail Group in 2020.

It has also owned Aeropostale, Stuart Weitzman and Nine West. In 2021 fashion apparel retailer Express, Inc announced it had entered into a definitive loan agreement with Sycamore Partners as lead lender, along with Wells Fargo and Bank of America Merrill Lynch, that strengthened its liquidity position by an additional $140m.

Jeff Lick, analyst at B. Riley says Sycamore is a “substantial, sophisticated player in Chico’s FAS space and an acquisition…made sense”.

Lick notes – when considering the 30-day go-shop period – that the likelihood of a higher bid emerging from another bidder is “extremely low”, adding much of that will have to do with the current leadership at the company.

“CEO Molly Langenstein is essential to Chico’s continued success, and, in our view, if she is implicitly backing the Sycamore bid, then we would suspect another bidder would have limited interest without her continued participation as the company’s CEO.”

Just Style approached Sycamore Partners and Chico’s FAS to establish why now was deemed the right time for a deal between the two to take place but the request for comment was declined.

However, GlobalData retail analyst Neil Saunders tells Just Style that a deal like this had to take place for Chico’s FAS to be able to capitalise on future growth opportunities.

Chico’s FAS, he notes, will benefit from Sycamore’s “deep pockets.”

“I get the impression that there are a lot of things the Chico’s management team has wanted to do in terms of expansion or growth that have been difficult because of concerns over funding or taking on too much debt. Those obstacles will now be removed.”

He does acknowledge Chico’s FAS will lose some of its “freedom and control” as a result of the new setup, but says it appears the management of the two organisations seem to “get on well”

“Despite some current softness, Chico’s is generally a well-run company and has a good position in the market. Sycamore has the financial firepower to build on this and accelerate expansion. Sycamore may also put some of Chico’s products into its Belk department stores,” he asserts.

Key takeaways for the fashion industry

In the near term at least, fashion firms will be scrambling for growth against an incredibly challenging economic backdrop, so we can expect to see many more partner with firms that have the financial firepower needed.

Just last week B.Riley upped its stake in US retailer bebe Stores with the financial services provider now having more than a three-quarter ownership in the business.

In September (2023) global management company WHP Global, which owns brands including Bonobos, Joe’s Jeans and Lotto as well as Toys ‘R’ Us and Babies ‘R’ Us, acquired Dutch denim brand G-Star Raw.

In terms of the Sycamore-Chico’s FAS deal, Saunders explains Chico’s fits well with the other brands in Sycamore’s portfolio.

Sycamore “will hope that it can use some of its existing expertise and infrastructure to improve efficiencies and reduce costs. Sycamore also sees potential in the brands and will want to expand their visibility and reach across the US retail market and beyond”.

Saunders adds: “With an ambitious owner, Chico’s will likely expand its distribution and visibility which is a potential threat to rivals.”

Our signals coverage is powered by GlobalData’s Thematic Engine, which tags millions of data items across six alternative datasets — patents, jobs, deals, company filings, social media mentions and news — to themes, sectors and companies. These signals enhance our predictive capabilities, helping us to identify the most disruptive threats across each of the sectors we cover and the companies best placed to succeed.