Report: Ascena Retail to buy Charming Shoppes
NEW YORK—Women's apparel retailer Ascena Retail Group Inc. has agreed to acquire the parent company of Lane Bryant and Fashion Bug for $890 million, according to The Wall Street Journal.
The story published on Tuesday cites unnamed people familiar with the matter, who also say the board of directors at Ascena and clothing chain Charming Shoppes Inc. have approved the deal.
The offer of $7.35 per share represents a 24.6 percent premium to the closing price of Charming Shoppes' shares on Tuesday.
Charming's shares ended regular trading up 1 cent at $5.90, but soared by more than 20 percent in extended trading, adding $1.30 to $7.20. The stock has traded between $2.29 and $6.38 over the past year.
Calls to Ascena and Charming were not immediately returned late Tuesday.
Charming, based in Bensalem, Pa., launched a strategic and financial self-review in December. At the time, it said that it hoped to sell its Fashion Bug operations so it could concentrate on its Lane Bryant brand, which caters to plus-size women by offering clothing sizes 14 through 28. It did not say whether or not its review would consider a potential sale of the company.
Like many retailers, Charming has faced rising product costs and tightened spending on the part of consumers in recent years.
For the 12 months ended in January, the company reported a loss of $2 million, or 2 cents a share, compared with a loss of $54 million, or 47 cents a share, a year earlier. Revenue in slid 3.4 percent to about $2 billion in the same period.
As of March, the company operated 1,857 stores in 48 states, including 802 Lane Bryant stores.
Acquiring Charming would give Ascena entry into the large-size women's clothing market.
The company, based in Suffern, N.Y., operates stores under the Dressbarn, Maurices and Justice brands. Dressbarn and Maurices offer clothing for young and older women, while Justice caters to tween girls ages 7 to 14.
All told, Ascena operates more than 2,500 stores in the U.S., Puerto Rico and Canada.
Its shares ended regular trading down $1.40, or nearly 7 percent, at $19.08. The stock regained $1.92, or 10.1 percent, to $21 in after-hours trading.