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Chico’s Jumps After Leonard Green Unveils 1.3% Stake in Retailer

Chico Black Label Spring/Summer 2014 | Source: Chico
By
  • Bloomberg

FORT MYERS, United States — Chico's FAS Inc., the operator of more than 1,400 women's clothing stores, rose the most in more than two years after Leonard Green & Partners LP disclosed a 1.3 percent stake in the retailer.

The shares advanced 8.4 percent to $16.97 at the close in New York yesterday, the biggest-one day gain since Feb. 22, 2012. The gain pared the decline of Fort Myers, Florida-based Chico’s to 9.9 percent this year.

Leonard Green, based in Los Angeles, purchased 2.05 million shares of the company, according to a filing yesterday. The stake makes the private-equity firm the 22nd-largest investor in Chico’s, according to data compiled by Bloomberg.

Leonard Green owns stakes in other specialty retailers, including J. Crew Group Inc. and Sports Authority Inc. Last year, the firm agreed to buy Lucky Brand Jeans for $225 million and was in a venture that bought Juicy Couture’s intellectual property for $195 million in cash.

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Chico's, which owns brands including White House Black Market and Soma in addition to its namesake line, has trailed analysts' estimates for earnings per share for five straight quarters, according to data compiled by Bloomberg. In the fourth quarter, sales fell 6.4 percent and gross margin narrowed as traffic slowed and the company cut prices to entice shoppers.

In September, activist investor Blue Harbour Group LP disclosed a 5.6 percent stake in the retailer and said talks with management could lead it to propose changes at the chain. While Blue Harbour didn't specify what steps it could take, JPMorgan Chase & Co. said at the time some investors were speculating there was an increased chance Chico's may become a buyout target.

By Lindsey Rupp; Editors: Nick Turner, Ben Livesey, John Lear

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