Saks and JC Penney lead next wave of US consolidation
Buyout activity set to continue
The wave of consolidation in the US retail sector shows no sign of slowing down, with department store operators Saks and JC Penney the latest subjects of sale and buyout speculation.
Saks, which is known to have been considering a sale of its underperforming 235-outlet regional department store business, may also sell the more upmarket and profitable Saks Fifth Avenue chain.
The [i]New York Times [/i]reports that Saks has hired Goldman Sachs and Citigroup to “explore strategic alternatives” for its whole business, quoting Saks executives. The company has received several enquiries from potential buyers of the 62-store Saks Fifth Avenue business, said the report.
Meanwhile, private equity firm Cerberus is reported to be considering a buyout of mid-market department store operator JC Penney. Vanessa Castagna, a former JC Penney executive who was once thought to be in line to become chief executive, recently joined Cerberus.
The economies of scale generated by mergers are seen by many US retailers as the best way to compete with the buying power of Wal-Mart, the world’s biggest retailer. Recent deals have seen Sears Roebuck agree a merger with Kmart, and Federated Department Stores agree to buy rival May Department Stores.
Upmarket US department store group Neiman Marcus also said earlier this month that it has launched a strategic review which could see a sale of the business.
