Fifth & Pacific to Sell Lucky Brand - Analyst Blog
December 11 2013 - 3:00PM
Zacks
Fifth & Pacific Companies Inc. (FNP), as a
part of its previously conducted brand evaluation, has agreed to
sell its second non-core brand, Lucky Brand Jeans. The brand sale
follows the company’s announcement to dispose its Juicy Couture
brand in early October. These divestitures will make Fifth &
Pacific a single-brand company focused on getting the best out of
its core Kate Spade brand.
Under the sale agreement, Fifth & Pacific has decided to sell
its Lucky Brand Jeans to a partner of Leonard Green & Partners
L.P. The company will receive $225 million from the sale,
comprising $140 million in cash and the remaining $85 million as a
three-year seller note.
Additionally, the deal allows Lucky Brand to assume a proportionate
share of Fifth & Pacific’s sourcing contract with Li & Fung
along with other obligations. Moreover, to enable smooth transition
of the sold brand, Fifth & Pacific has agreed to sign a
Transition Services Agreement (TSA) for a nearly 24-month span.
The sale, conditioned upon the completion of certain general
conditions, is expected to close in the first quarter of 2014.
In October, Fifth & Pacific had agreed to divest its Juicy
Couture brand to privately held Authentic Brands Group LLC for
about $195 million in cash. Together, the sale of these two brands
is expected to generate $370–$380 million liquidity for the
company, including the face value of the seller note issued for
Lucky Brand.
The process for the sale of the two brands began last year, when
the company initiated a study to estimate its capital and resource
needs, as well as risks and opportunities related to the operation
of its three brands – Kate Spade, Lucky Brand and Juicy Couture,
while also focusing on maximizing shareholder value.
Following the sale of the two non-core brands, the company will
focus wholly on expanding its Kate Spade brand. Today, Kate Spade
offers rapid growth prospects, given its worldwide demand, strong
margins and better merchandise assortments, compared to its peers.
The company expects to provide guidance for fiscal 2014 in early
January, revealing a clearer picture about its future plans.
Fifth & Pacific currently has a Zacks Rank #3 (Hold).
Better-ranked stocks among apparel retailers include Citi
Trends Inc. (CTRN), Fossil Group Inc.
(FOSL) and Michael Kors Holdings Limited (KORS).
All these stocks carry a Zacks Rank #2 (Buy).
CITI TRENDS INC (CTRN): Free Stock Analysis Report
FIFTH PACIFIC (FNP): Free Stock Analysis Report
FOSSIL GRP INC (FOSL): Free Stock Analysis Report
MICHAEL KORS (KORS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Citi Trends (NASDAQ:CTRN)
Historical Stock Chart
From Jun 2024 to Jul 2024
Citi Trends (NASDAQ:CTRN)
Historical Stock Chart
From Jul 2023 to Jul 2024