Blog: Leonie BarrieDress Barn tries onTween Brands

Leonie Barrie | 29 June 2009

In a deal that took the market by surprise last week, off-price women's apparel retailer Dress Barn  is set to acquire teen fashion retailer Tween Brands in a stock-swap agreement worth around $157m.

The transaction is due to close in the fourth quarter of this year, and will see Tween Brands – which targets 7 to 14-year-old girls through its 908 Justice stores – become a separate subsidiary of Dress Barn. The combined company will have net sales of around $2.4bn and operate 2,465 stores.

While some industry observers wonder what synergies there are between the two businesses, Dress Barn believes that adding the Justice chain will help to "diversify and complement" its existing career and casual fashion business. Tween Brands, meanwhile, will have its outstanding bank debt paid off. The companies also hope to generate cost savings through economies of scale in areas such as sourcing and real estate.

Changes are also taking place at athletic shoe and apparel retailer The Finish Line, which is to exit its unprofitable Man Alive business and focus instead on its core operations. The deal involves paying $7m in cash to a new company set up by the owner of the Jimmy Jazz chain – who will take control of 75 Man Alive and Decibel stores.

The urban apparel chain’s poor performance helped push Finish Line to a first quarter loss of $608,000 as sales dropped 7.2% to $267.2m. By division, same-store sales for Finish Line fell 3.9%, while Man Alive plunged 39.1%.

Slumping sales in every geographic region except Asia coupled with restructuring charges to push sporting goods giant Nike Inc to a 30% drop in fourth quarter profit of $341.4m. Revenues fell 7% to $4.7bn. But most worryingly for the Beaverton, Oregon based firm, worldwide future orders for Nike-branded footwear and apparel scheduled for delivery between June and November – a key indicator of future sales – are down 12%.

More than six months after shuttering its 807 high street stores, the Woolworths brand has begun trading again in the UK as an online business – selling a range of products including its iconic Ladybird children's wear label. The relaunch comes after the two names were bought by online and home shopping retailer Shop Direct Group back in February, and there are now plans to introduce clothing, footwear and sportswear for older kids too.

Marks and Spencer, meanwhile, has come under fresh attack over its continued insistence that the powers of chief executive and chairman are combined under Sir Stuart Rose as executive chairman. In a research note to institutional investors, advisory firm PIRC is backing plans calling for the appointment of an independent chairman by July 2010. Sir Stuart has also tried to placate shareholders by foregoing a third of his share entitlement – worth an estimated GBP1.13m (US$1.8m).

 


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