Saks Inc. on Friday said it would sell its Proffitt’s and McRae’s stores to Belk Inc. for $622 million and may shed other chains while keeping its namesake Saks Fifth Avenue luxury department store business.
The restructuring by Saks came as rival upscale retailer Neiman Marcus Group Inc. on Friday was expected to receive final takeover bids of about $5 billion, sources familiar with the situation told Reuters.
Private equity firm Kohlberg, Kravis Roberts & Co. has paired with Bain Capital, and Thomas H. Lee has joined with Blackstone Group to compete in the Neiman Marcus auction, according to the sources familiar with the situation.
The restructurings by Saks and Neiman Marcus follow a crush of consolidation in the retail industry, coming after Federated Department Stores Inc.’s agreement to buy rival May Department Stores Co. and the merger between Kmart and Sears Holdings Corp.
Saks said Belk will take over the 22 Proffitt’s stores and 25 McRae’s stores for cash, and assume about $1 million in capitalized lease obligations and other liabilities.
Birmingham, Ala.-based Saks also said it is exploring options for its Northern U.S. department store chains, which include stores such as Carson Pirie Scott and Herberger’s. Those stores generated revenues of $2.2 billion in 2004.
Preteen-focused retailer Club Libby Lu, which Saks acquired in May 2003 and which generated revenues of $30 million in 2004, may also be put up for sale, Saks said.
The company said it plans to hold on to its Parisian stores and will continue to operate its Saks Fifth Avenue Enterprises business, which consists of 57 Saks Fifth Avenue stores, 52 Saks Off 5th stores, and saks.com.