Jones Apparel Group said Thursday it received a $900 million unsolicited cash proposal from Japan's Fast Retailing Co. (9983.TO) for its luxury department store chain Barneys New York. On June 22, Jones agreed to sell the stores to the Dubai government's private equity arm Istithmar for $825 million; it has been shopping the chain since last year. There is a $20.6 million termination fee if Jones cancels the original deal. Jones said the agreement with Istithmar has not been terminated at this point, and remains in full force. The Barneys sale was a windfall for much-criticized CEO Peter Boneparth, who bought the chain in 2004 for $400 million, and has been under pressure from shareholders to boost the company's share price in the face of weak sales (shares are down 15% YTD). Some analysts, however, have criticized the deal, noting the unit has produced stellar same-store sales increases amid strong demand for upscale merchandise, and affords Jones diversification from its weaker discount business. In a June 25 note, Wall Street Strategies analyst Brian Sozzi called the sale "a short-term fix" and said "long-term fundamentals continue to be questionable." Shares are up 5.5% to $29.95 in pre-market trading.
Sources: Press release, Dow Jones, MarketWatch
Commentary: Jones Apparel Group: No Catalysts In Sight to Boost Ailing Stock • Jones Apparel: Room to Grow -- Barron's • Jones Apparel May Sell Barneys Today -- New York Times
Stocks/ETFs to watch: Jones Apparel Group Inc. (JNY). Competitors: AnnTaylor Stores Corp. (ANN), Brown Shoe Company Inc. (BWS), Liz Claiborne Inc. (LIZ). ETFs: Retail HOLDRS ETF (RTH)
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