Chico's FAS Inc. (Fort Myers, Fla.) has signed a definitive agreement to purchase The White House Inc. (Glen Burnie, Md.) for $90 million.
Chico's will pay for this acquisition with approximately $85.6 million in cash and $4.4 million in company common stock (or approximately 176,000 shares). The transaction has been approved by both boards of directors and is anticipated to close in the third quarter of 2003.
The White House Inc. currently operates 103 White House/Black Market specialty apparel stores in 30 states, the Virgin Islands, Puerto Rico, and the District of Columbia. The chain sells high-end private-label fashion and basic merchandise aimed at women 30-50 years old.
Chico's management expects the acquisition to add sales in the range of $32-$36 million for the remainder of fiscal 2003 based on a closing in September and the planned opening of eight new White House/Black Market stores during the remainder of this fiscal year and between $100-$110 million of revenues next year, based on the opening of between 25 and 30 new White House/Black Market stores.
“We are very pleased to bring these two companies together,” said Chico's president and coo Scott Edmonds. “Over the past few years, we have been impressed with the development of the White House/Black Market concept. It is clear to us The White House has a proven store model and we are convinced that there should be a tremendous fit with our organization from a strategic, financial, cultural, and operational viewpoint. Our superior access to capital, as well as our operational and marketing expertise, combined with their strong merchandising philosophy and highly compelling opportunity for store expansion should benefit women consumers across the country and provide enhanced value for our shareholders.”
White House founder, chairman, president and ceo Richard Sarmiento said, “Although we had recently been pursuing our own public offering, we are extremely excited to open new avenues for the White House/Black Market concept by becoming a part of the Chico's organization. We believe that the benefits this transaction will provide to The White House should be immediate. It has become increasingly apparent over the past few years that the Chico's team has an intuitive understanding of the specialty apparel market. Chico's has built a world-class operational platform that The White House should be able to leverage to effectively execute our growth plan.”
Chico's, one of the few apparel retailers thriving in an uncertain economy, operates 413 women's specialty stores, under the name of Chico's and Pazo, in 42 states and the District of Columbia. The company owns 371 Chico's front-line stores, 20 Chico's outlet stores and 10 Pazo stores; franchisees own and operate 12 Chico's stores. Chico's target audience is middle-to-high-income women ages 25-40. Pazo targets women ages 25-35 and sells American and European fashions.