Three years after buying it out of bankruptcy, Versa Capital Management is seeking a new owner for the Avenue Stores LLC plus-size clothing chain, according to people familiar with the matter.
The investment bank Houlihan Lokey is running the sale process, said the people, who asked not to be identified because the matter isn’t public.
Versa, a buyout firm in Philadelphia, turned around the once-struggling Avenue chain and is looking to capitalize on growing demand for plus-size clothing. Sales of the apparel totaled about $18 billion during the 12-month period ending in June, according to NPD Group. The market’s potential has attracted retailers like Target Corp., which rolled out a larger-size clothing line, Ava & Viv, this year.
“The perfect storm is in place for the plus-size market to grow,” said Marshal Cohen, chief industry analyst for NPD, which defines the category as sizes 18 and up. The number of overweight Americans has grown, they’re an underserved market, and a broader upswing in women’s fashion demand could fuel sales, he said.
Avenue’s former parent, United Retail Group Inc., filed for bankruptcy in 2012. At the time, United Retail said it was seeking relief from expensive leases negotiated before the recession. An affiliate of Versa completed its purchase of the chain in April 2012. Avenue, based in Rochelle Park, New Jersey, operates about 300 stores.
John Gallagher, a spokesman for Houlihan Lokey, declined to comment on an Avenue sale, as did Chuck Dohrenwend, a spokesman for Versa who works for Abernathy MacGregor Group.
Versa buys distressed companies with an emphasis on the retail and consumer sector. In April, one of its affiliates completed the acquisition of the bankrupt clothing chain Wet Seal.