Is Chico’s going private?

Rumors that the private-equity firm Sycamore Partners will take Chico’s private have sent its stock soaring. Meanwhile, the question posed on RetailWire is whether this move will be good for Chico’s business. I have mixed feelings on the topic:

Sycamore has already assembled a collection of mall-based specialty apparel chains. (The article mentions Aeropostale and Talbots, but there are also investments in Hot Topic and the Coldwater Creek brand assets.) These are not the strongest brands in the business, and even Chico’s is struggling right now. Either Sycamore believes in the segment, or they bought the brands at a sufficient discount to make some money on a future sale.

Going private can be liberating for a company no longer under the microscope for its quarterly results, but the question in Chico’s case is whether Sycamore is already highly leveraged and how it will affect the company’s operations. It would make sense for Sycamore to find some back-office economies among all the brands and chains it now operates.

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