I guess we are not the only ones who found this news (about Sears & UO both planning to buy out J.Crew) a bit odd.The Crazy Rumors Surrounding J.Crew
By Alyce Lomax
January 6, 2011
According to those notoriously gabby "people with knowledge of the matter," a pair of unlikely candidates are mulling the idea of placing bids on J.Crew.
In late November, word broke that TPG Capital and Leonard Green & Partners planned to buy J.Crew -- and take it private -- in a transaction valued at $3 billion, or $43.50 per share.
There's a giant "say what?" attached to the rumors, though. Two supposed contenders may be trying to snap up J.Crew first: Sears Holdings and Urban Outfitters.I suppose anything's possible, even if the rumor in question sounds nonsensical. I can only hope that J.Crew investors don't expect some kind of crazy bidding war like the one Dell and Hewlett-Packard waged for 3PAR last summer, driving the price for the company ever higher. Chances are that the private equity buyout that's already on the table is about as good as it's going to get for J.Crew shareholders.
- Why?! Urban Outfitters does just fine on its own, growing organically with new, fresh retail concepts that it dreams up in house. Although J.Crew and Urban Outfitters are both known for being run by excellent merchants, their basic target customers -- preppie types vs. the individualistically bohemian -- are a little too mismatched.
- What?! Sears Holdings sure could use a shot in the arm, but good grief, it can't even handle running the retail concepts it already has with much success. The second anybody caught on that J.Crew was now run by Sears, or heaven forbid, being sold in Sears (which happened to Land's End), the good times are over for J.Crew's brand. That would leave Sears with yet another fumbled brand.
What do you think? Would bids from Urban Outfitters or Sears make sense? Would some other retailer be a better fit with J.Crew?
J.Crew's transition to private keeps getting more and more interesting (almost gossip-like). I can't wait to find out what the next twist in the developments will be. ;)
What are your thoughts on this latest news? Do you think the news about Urban Outfitters or Sears interest in acquiring J.Crew are just rumors? Do you think going private is still the right move for J.Crew?
I don't think it makes sense for Jcrew to be under with Urbn or Sears. Anthropologie and Jcrew are loved by similar groups of people...I mean, I love both brands although they're completely different styles. Anthro, Urban Outfitters, and Free People do have the same "styles." I don't think Jcrew's CEO would want to be under Anthro's CEO.
ReplyDeleteAs for Sears...yes if Sears starts selling Jcrew clothes in their dept store, it's a huge DAMAGE to the jcrew brand. I'd stop buying Jcrew then.
Angela: I totally agree. :) It doesn't make sense for UO or Sears to acquire. Even though UO and Sears do a good job with their respective brands, I don't think either firm would manage J.Crew's brand better than J.Crew is doing right now.
ReplyDeleteNice misuse and non-capitalization of the word "bohemian". I'm Bohemian-American, and I shop a lot more at JC than at UO.
ReplyDeleteDid Lands End start doing worse after being bought by Sears?
ReplyDeleteIt's interesting, I shop at LE and especially LEC, but since I do all my ordering on-line, I don't think of Sears as anything other than a convenient place to make returns. I don't think of it as shopping at Sears.
Similarly, I had no idea until recently that Sephora was associated in any way with JCPenney, another place I don't shop.
Bottom line: I just hope J.Crew goes back to quality items, gets over its delusions of grandeur, stops putting ruffles/unfinished hems on every other product, realizes 15-inch minis are absurd, and ... well a whole bunch of other things, but basically goes back to being a retailer I enjoy instead of one that makes me yawn, as has been the case over the past year.
Sobering if Sears is thinking about an all-cash deal or some kind of stock swap... Or if indeed the 2 are really thinking about a deal at all, since there's very liitle time remaining in which to structure one. Maybe some of the bloggers and commentators are right -- they just want a free look at JC's books.
ReplyDeleteWhen is the deadline to make a decision, including "do nothing"?
ReplyDeleteThere is no doubt that J Crew as we know it will die if Sears manages to buy it, I hope it won't happen. I can see things working out if UO buys it, though they will have to play it just right.
ReplyDeleteSears is feeling a little overconfident with a younger, hipper demographic, I think, after the splashy success of LE Canvas. I wonder what % of LEC customers have actually set foot in a Sears store, and how much of a brand benefit they get from LEC when consumers still don't associate the two beyond a "returns" location, as Barbabelle mentioned!
ReplyDeleteOne of Sears Holding Corp's major asset is the large number of super long-term leases it holds in malls and shopping centers across the United States. I believe that SHC has been looking for awhile for a retail acquisition that can be eventually paired with all that low cost space, which would allow SHC to turn a handsome profit.
ReplyDelete(The rent that JC pays to mall owners is a significant expense. Some of you may remember Mickey complaining at the beginning of the recession that their LL's needed to remember that it was stores like JC that brought people to the mall, and not the other way around.)
Restoration Hardware was a SHC target for a quite awhile but that deal never panned out. With the recent success of the new Lands End Canvas line, they may think that JC would offer an upscale complement to their current offerings. I doubt, however, that anything will come of SHC's interest in JC.
If Sears bought JC, I think I'd send out an obituary.
ReplyDeleteJcrew, at least the mens, isn't truly preppy anymore anyways, hasn't been since about 2003. So UO would not surprise me. But as far as Sears...
ReplyDeleteIts too bad there are a lot of terrible jcrew stores out there. For instance go to one in New York vs one at a bad mall in Cleveland.
My point is that something similar to what Ralph Lauren does would be interesting. They sell all their merchandise at the flagships at sometimes a loss and end up not selling most of the inventory. They rely on keeping those stores as living advertisements(they do make a little money but not much). They make their big money on the thousands of avg middle class americans buying polo shirts and khakis from department stores. MOST of their business comes from that. Avg people think that by buying the khakis and the polos they are fitting into the lifestyle of the high dollar things sold at the flagships and what is shown in the magazine ads.
I doubt Jcrew switches to a model like this but it is interesting how they take a lot of pages out of RL's book selling a lot of one of a kind items in the nicer stores-mens liquor, mens shop, womens collection store.
Love shopping both LE stores in my area at Sears. Was so excited when it was bought by Sears and I could shop in store instead of online only. Selection, quality and price is great for all my family members. I bought the nicest shirt dress the other day and have gotten tons of compliements on it. I never look at regular Sears clothes but head straight to the LE section. The prices for quality are so much better than JCrew these days. 100% gurantee on their clothes; no time limit on returns. I would be thrilled if Sears bought JCrew. My local JCrew never has what I want and I have to order online anyway.
ReplyDeleteBoth Sears and UO are publicly traded companies. I would like to be a fly on the wall at their BOD meetings right now. ;)
ReplyDeleteIt's not just rumor- this news has been all over the business pages of credible media publications:
ReplyDeletehttp://www.chicagobusiness.com/article/20110105/NEWS07/110109944/sears-taking-look-at-j-crew#axzz1ANtnPvjg
http://dealbook.nytimes.com/2011/01/05/urban-outfitters-and-sears-circle-j-crew/
what an interesting post. I actually love having Lands End at Sears. I never bought their stuff until they started offering it at Sears. I shop online and do returns at the store.
ReplyDeleteI agree with others- I can't see Sears selling J Crew - it would really tarnish the J Crew image. I really hope it doesn't happen.