Chico's Signs $90M Deal to Buy The White House Inc.
The price will be $90 million plus associated expenses and will include about $85.6 million in cash and $4.4 million in Chico's common stock. The transaction was approved by the boards of directors of both companies and is to close in a month or two.
Chico's, Fort Myers, FL, expects the acquisition to add sales of $32 million to $36 million in the rest of fiscal 2003, based on a September closing and the planned opening of eight new White House/Black Market stores in the rest of this fiscal year, which ends early in 2004.
It expects the acquisition to contribute $100 million to $110 million of revenue based on the opening of 25 to 30 White House/Black Market stores next year.
Richard Sarmiento, chairman/president/CEO of The White House, will continue to head operations at The White House Inc.
Chico's sells exclusively designed, private-label women's clothing and accessories. It operates 413 women's specialty stores under the name of Chico's and Pazo in 42 states and the District of Columbia. The White House Inc. owns and operates 103 women's specialty stores under the White House and Black Market names.
Charlie Kleman, chief financial officer at Chico's, called the acquired company a growth vehicle.
"We intend to set up a selling Web site and catalog for The White House in the future," he said. "We don't know when. It's still in development.
"[The purchase is] going to give us access to a younger customer. The Chico's customer's median age is 53, and the median age of customers, we suspect, is 12 to 15 years younger at The White House. We think we can ramp [The White House] up to between 550 and 650 stores."
Kleman has no timetable for the expansion, and no concerns regarding the economy.
"We think that [Chico's also] can go to 550 to 650," he said. "We have been running double-digit comps for seven consecutive years at Chico's -- assuming we get through [this] year with the present double-digit comp. We're in the middle of our seventh year right now."
Chico's Web site and catalog account for about 3 percent of overall sales, Kleman said. He estimated that the catalog, which mails monthly, drives about 30 percent of the company's store business.