Chico’s FAS, Inc. (NYSE:CHS) Considering a Sellout, While it Continues to Accelerate Store Closures around the Country

Chico’s FAS, Inc. (NYSE:CHS) is reported to be conducting negotiations with a number of firms for a buyout of the company. Private equity firms have expressed interest in the company, after it reported improved margins during the current year. Furthermore, it is also reported that the company has acquired the services of Peter J. Solmon to assess the current offers. Unfortunately, representatives from the company and the investment bank have remained silent over the matter.

CHS had recently filed its 2Q2015 results, reporting a net income of $35.5 million, an increase of $5.4 million from the same period in the preceding year. There was also an increase of 1.4% in sales, which reached a total of $680.4 million for the 2Q2015. Additionally, the company had also made public plans to sell the Boston Proper Direct-to-consumer business and shut down all of its stores. However, this was before the company decided to consider accepting any of the buyout offers.

Chico’s FAS is a retailer of women’s clothing and non-clothing items and operates through a number of its subsidiaries. A recent bid for the company from Sycamore is reported to have been rejected, after the two companies failed to reach an agreement on financial issues. This might mean that even though CHS is seriously considering a sellout, it is not willing to go cheaply. However, the Sycamore proposal has not been officially rejected and is still lined up, while the company considers other offers.

Additionally, CHS has more recently been following a policy of accelerated store closures, despite the fact that the company has been reporting increased sales and profit margins, as compared to the same period in the preceding year. Many of these actions have been linked with a mishap on a merchandise vessel owned by the company. As per reports the vessel suffered a collision with another ship at sea, which led to a delay in the launch of key products in the 1Q2015.

Chico’s FAS, Inc. (NYSE:CHS) experienced trading volumes of 7.74 million shares to report an increase of 10.19% in its share value, during the September 14 session. The stock stood at a share price of $16.66 at the final bell.

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Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.

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