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Chico’s confirms buyout offer from same firm it previously rejected

A private equity firm that currently owns a 6.6% stake in Chico’s FAS wants to purchase the rest of the chain.

The embattled women’s apparel and intimates retailer confirmed it has received an unsolicited proposal from Sycamore Partners to acquire the retailer for $3.50 per share in cash, about $407.8 million. Chico’s said it will review the proposal “to determine the course of action that it believes is in the best interests of Chico's FAS shareholders.” The company also revealed that it had received, reviewed and rejected a previous unsolicited offer from Sycamore to acquire Chico's for $4.30 per share in cash. Chico’s did not say when the previous offer was made.

“Following this review, the board unanimously determined that the prior proposal substantially undervalued Chico's FAS and was not in the best interests of Chico's FAS shareholders,” the retailer stated.

Chico’s has been challenged by sliding sales amid a decline in mall traffic and online competition. The company’s total same-store sales fell 4.9% last year and net sales slipped to $2.1 billion from $2.3 billion.

In January, Chico’s announced that it planned to close at least 250 stores across its three brands during the next three years. In April, CEO and president Shelley Broader resigned. While it searches for a permanent replacement, Bonnie Brooks, former vice chair, president and CEO of Hudson's Bay Company and a current member of the Chico's board, is serving as interim chief.
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