Sycamore lowers bid for Chico’s FAS — again

A buyout offer for Chico’s FAS has gone lower for the second time.

Sycamore Partners has revised its buyout offer for the struggling women’s apparel retailer to $3.00 a share, or $350 million, in cash as the chain continues to battle sliding sales. In May, Chico’s rejected an offer from Sycamore for $3.50 per share after previously having turned down its offer of $4.30 per share.

Chico's on Wednesday said its board will carefully review Sycamore's new and revised proposal. But it noted that numerous Chico's shareholders have expressed to management that they support the board's previous decision to reject Sycamore's proposal and share the view that Sycamore's proposal is inadequate.

Chico’s has been challenged by sliding sales amid a decline in mall traffic and online competition. The company’s same-store sales fell 4.9% last year and net sales slipped to $2.1 billion from $2.3 billion. In Chico’s recently completed first quarter, net income fell to $29.0 million from $33.6 million in the year-ago period. Same-store sales were down 5.9%. The retailer has cut its outlook for the full year.

“Your most recent full-year guidance requires a significant improvement in performance trends and an increase in EBITDA (cash flow) of $10 million, or 25%, in the second half of the year,” Sycamore managing director Stefan Kaluzny wrote in a letter to Chico’s chairman David Walker.

"Engaging with us so we can perform our due diligence will create an attractive and certain alternative for your shareholders, which we believe is in their best interest given the company's deteriorating performance and share price," Kaluzny wrote. “Should our due diligence provide us the confidence that this plan is achievable, we would be prepared to increase our offer.”