FINANCE

Jos. A. Bank, Men’s Wearhouse willing to meet

BY Dan Berthiaume

Hampstead, Md. – Jos. A. Bank Clothiers Inc. has officially rejected Men’s Wearhouse’s latest $1.78 billion buyout offer. But in yet another twist to the long-running saga between the two companies, in open letter to Men’s Wearhouse president and CEO Douglas S. Ewert, Jos. A. Bank said it is willing to meet with its rival.

In the letter, Jos. A. Bank said that although it believes purchasing Eddie Bauer will create real value for shareholders and it is proceeding with the purchase of Eddie Bauer parent company Everest Holdings LLC, because Men’s Wearhouse has said it would consider raising its offer, Jos. A. Bank will meet with the retailer to see what its highest offer is. Jos. A. Bank said it would also discuss issues such as providing limited due diligence and determining structure and certainty of a transaction.

Reports have indicated that Goldman Sachs, sole underwriter of the $400 million bridge loan supporting the Eddie Bauer purchase, has put financing the loan on hold. However, the letter states that Goldman Sachs remains fully committed to providing financing.

In addition, Jos. A. Bank announced that the Federal Trade Commission has granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 with respect to the pending transaction between Jos. A. Bank and Golden Gate Capital, under which Jos. A. Bank will acquire Everest Holdings. The Eddie Bauer deal is structured so that Jos. A. Bank can exit the deal if a more favorable transaction becomes available before it is completed.

“Please be advised that, notwithstanding our willingness to provide you with this opportunity to address the foregoing issues, the Jos. A. Bank board has made no determination to sell the company, and no determination that your proposal is a superior proposal, as defined in our membership interest purchase agreement for the Eddie Bauer transaction,” said the letter, signed by Jos. A. Bank chairman Robert N. Wildrick.

In a public response, Men’s Wearhouse said a purchase of Jos. A. Bank has the “strategic logic and the potential to deliver substantial benefits to our respective shareholders, employees and customers.” A letter signed by Ewert said Men’s Wearhouse is willing to discuss due diligence, structure and certainty of the deal, and will have its advisors get in touch with Jos. A. Bank to set up meetings.

“We look forward to working collaboratively with the Jos. A. Bank Board and management to effect this combination which would provide your shareholders with a substantial premium and immediate value,” said the letter.

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FINANCE

Dots to close all stores; Gordon Bros. handling liquidation

BY Marianne Wilson

New York — After over 25 years in business, Dots, an Ohio-based women’s fashion discount retailer, is closing its doors. Store-closing sales will begin on Friday, March 1, with discounts on all merchandise, as well as store furniture, fixtures and equipment. Dots filed for Chapter 11 protection on January 20, 2014.

Dots selected Gordon Brothers Group’s Retail Division to oversee the chain’s going-out-of-business sales in all of its 360 locations. Stores will remain open until all merchandise has been sold. All inventory will be on sale and discounts will begin at 20%.

Dots officials contacted 268 potential buyers but weren’t able to find any offers that would have kept the chain alive, according to a report in the Wall Street Journal.

Dots has struggled against competition from both online retailers and other brick-and-mortar discount retailers that have greater resources and wider brand recognition. The retail chain has experienced trouble throughout the economic downturn with a significant decline in store traffic. Dots’ financial difficulties have been exacerbated by a number of largely unsuccessful changes in product pricing and marketing, as well as a burdensome lease portfolio.

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Gap to expand Athleta banner

BY CSA STAFF

Gap reported a 12.5% decline in fourth-quarter profit, with its results impacted by heavy discounting during the holidays. The retailer also issued a profit outlook for the full year that is below analysts’ expectations, and said it will open 30 additional U.S. stores during fiscal year 2014.

Gap reported net income of $307 million for the three-month period ended Feb. 1, better than the Street expected, down from $351 million in the year-ago period.

Revenue totaled $4.58 billion, down from $4.73 billion. The company noted that fiscal year 2013 had 52 weeks compared with 53 weeks in fiscal year 2012. Same-store sales were up 1%.

Net income for the 52 weeks ended February 1, 2014 was $1.28 billion, compared with net income of $1.14 billion for the year-ago period.

“We are pleased to deliver another year of profitable growth for our shareholders,” said Glenn Murphy, chairman and CEO of Gap Inc. “Engaging customers across our multi-channel portfolio of brands positions us well on our path to winning in the global marketplace.”

Net sales increased $497 million to $16.15 billion for the 2013 fiscal year compared with net sales of $15.65 billion for the 2012 fiscal year. Same-store sales were up 2%.

In fiscal year 2014, the company expects to open about 185 company-operated stores, with a focus on China, Old Navy Japan, Athleta and global outlet stores. The company expects that it will close about 70 company-operated stores, net of repositions.

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