News from retailers today was as busy as a suburban mall on a rainy Saturday afternoon as a Canadian company accepts an American financier’s buyout, the No. 1 U.S. department store forecasts a bleak year for earnings and a California-based teen outfitter grabs a rival, rescuing the company from bankruptcy.
U.S. entrepreneur Jerry Zucker agreed today to pay $1.3 billion for Canadian department store group Hudson’s Bay Co. through his Maple Leaf Investments. The offer of C$15.25 ($13.25) per share is up 3.3% over its original bid, which was set to expire Jan. 31, of C$14.75 per share. The offer comes nearly two years after Zucker first publicly announced an interest in the company.
Zucker, of course, should be careful about what he wishes for. Department stores are quickly becoming the dinosaurs of the retail industry. Zucker only has to look to Federated Department Stores Inc., which presented a grimmer-than-expected profit forecast for 2006 today, with estimated full-year earnings per share of $3.45 to $3.70. The range falls far below analysts’ expectations of $4.02 to $6.97 per share, according to Reuters Estimates.
The Cincinnati-based department store chain, the largest in the U.S., acquired the May Department Stores, of St. Louis, for $11 billion in August and cited difficulty integrating the new company as reason for the less favorable forecast. Late this afternoon, Federated shares were trading down 2.17% at $69.28 per share.
Meanwhile, Foothill Ranch, Calif.-based Wet Seal Inc. announced plans Wednesday to take the assets of rival teen outfitter, New York-based G+G Retail Inc., for $15.2 million, saving the company from bankruptcy, the proceedings of which G+G began today. — Carolyn Murphy
