Saks Inc. Reiterates Sale Talk
Cecile Corral -- Furniture Today, May 23, 2005
Birmingham, Ala. — Saks Inc. is exploring strategic alternatives for its Carson Pirie Scott & Co. and Club Libby Lu segments of its department store group, suggesting the potential sale of each, the company said during its first quarter earnings call last week.
Carson Pirie Scott & Co. — which operates under the nameplates of Carson Pirie Scott, Bergner's, Boston Store, Herberger's and Younkers — generated $2.2 billion in revenue in 2004 from its 143 units in 12 Midwestern and Great Plains states. Club Libby Lu rang in $30 million in the same period from its 43 units and 23 in-store shops. In the balance of 2005, the company expects to grow the number of Club Libby Lu units and shops by 20 new locations.
“We believe there are domestic and international growth opportunities for (Club Libby Lu) and this strategic alternative process can result in an independent future for this high growth business,” said R. Brad Martin, chairman and CEO of Saks Inc.
Related to the recent pending sale of Saks Inc.'s $700 million revenue Proffitt's/McRae's business to Belk Inc. for $622 million, the company said the transaction should be completed in the second quarter, likely early July. It added that it will be using the proceeds from this sale for general corporate purposes, as well as for potential repurchases of debt and equity securities.
“The business that we are selling to Belk is a pretty good proxy of the aggregate performance of our department store group,” Martin said. “There's not a dramatic variation in performance of the group, and from an operating margin standpoint, our Parisian business has had the lower operating margins among our department store group assets, but those continue to improve, and there is a lot more room for improvement there.”
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