Talk of deals lifts J.C. Penney, Saks shares
Retailers draw buyers' interest
NEW YORK -- Shares of J.C. Penney Co. Inc. and Saks Inc. each climbed more than 8 percent yesterday, fueled by published reports this week that both retailers could be selling their businesses.
Penney shares surpassed their previous 52-week closing high of $48.98. Saks shares closed above their 52-week high of $17.92.
Women's Wear Daily reported yesterday that Cerberus Capital Management LLP and the Carlyle Group are teaming up to make a bid for Penney, which is based in Plano, Texas.
Penney said in a statement that its policy is ''not to comment on such rumors." But the statement also quoted chairman Myron Ullman as saying the company has developed a long-range plan that it will discuss at an analyst meeting April 19 and 20.
The Carlyle Group declined to comment on the report. Officials at Cerberus Capital did not immediately return calls.
For its latest fiscal year, Penney earned $524 million, or $1.76 per share, compared to a loss of $928 million, or $3.13 per share, the previous year. Revenue rose 3.6 percent to $18.42 billion from $17.79 billion.
Michael C. Appel, a retail expert at the corporate restructuring firm Quest Turnaround Advisors LLC, based in Purchase, N.Y., said the department store retailer has become attractive to investors because of Federated Department Stores Inc.'s $11 billion play for St. Louis-based rival May Department Stores Co. Analysts believe Federated's plans to go upscale with the merchandise at May's stores will leave more room for Penney, a mid-price merchant.
''With fewer players, there may be some feeling that there is an opportunity for Penney to take more share at the lower end of the department store sector," Appel said.
Women's Wear Daily reported Wednesday that Saks, based in Birmingham, Ala., is lining up buyers for its regional mid-price department store group, which operates Parisian, Proffitt's, Younkers, and McRae's. It is also considering selling its luxury Saks Fifth Avenue division. The New York Times reported yesterday the board of Saks has hired investment bank Goldman Sachs and Citigroup to explore ''strategic alternatives."
