Sycamore Said to Near Deal to Buy Jones Group for $1.2 Billion

Private-equity firm Sycamore Partners is nearing a deal to buy Jones Group Inc. for $15 a share, a transaction that would value the retailer at about $1.2 billion, according to two people familiar with the matter.

The deal may be announced as early as next week, said one of the people, who asked not to be named because the process is private.

Sycamore, based in New York, focuses on investing in the retail market and had teamed up with KKR & Co. to make a joint offer for Jones Group in earlier bidding rounds before the latter dropped out of the process. Jones Group, the owner of the Jones New York and Nine West fashion brands, hired Citigroup Inc. about five months ago to evaluate options including a sale, people with knowledge of the matter said at the time.

Jones Group has struggled in recent years as it has sought to revive its Jones New York women’s sportswear brand that is sold in mid-priced department stores like Macy’s Inc. Its premium brands like Stuart Weitzman have fared better. It also sells apparel and shoes under brands such as Anne Klein and Rachel Roy.

New York-based Jones Group and Fifth & Pacific (FNP) Cos., which was another multi-brand fashion vendor, suffered as sales at department stores have stagnated and the stores have ramped up their exclusive label goods to draw shoppers.

Rather than sell itself in one piece, Fifth & Pacific, also based in New York, has reduced itself down to Kate Spade, having reached deals to sell off Lucky Brand jeans and Juicy Couture.

Potential Buyers

A number of potential buyers including G-III Apparel Group Ltd. (GIII) and other private equity investors were more interested in cherry-picking some of Jones Group’s better-performing brands than in buying the whole company, people familiar with the matter have said.

Sycamore was started in 2011 by two executives from buyout firm Golden Gate Capital Corp. It agreed to buy Hot Topic Inc., the operator of more than 800 stores selling clothing, accessories and music to teens, for about $600 million in March. Hot Topic was Sycamore’s fourth major investment.

Analysts estimate Jones Group’s adjusted earnings per share will drop for a fourth consecutive quarter during the three-month holiday period. Revenue will sink 6 percent after jumping 9 percent a year ago, they project on average.

Sharon Stern, a spokeswoman for Jones Group at Joele Frank, didn’t reply immediately to an e-mail seeking comment.

Robert Julavits, a spokesman for Citigroup, declined to comment. A Sycamore spokesman declined to comment.

The Wall Street Journal reported earlier on Sycamore’s offer to buy Jones Group. Shares in the retailer gained 4.7 percent to $14.37 at close in New York yesterday following the report.

To contact the reporter on this story: Jodi Xu in New York at jxu205@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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