Chico’s Dyer Says Boston Proper Will Add More Cutting-Edge Style
Chico’s FAS Inc. (CHS)’s purchase of online retailer Boston Proper will add more cutting-edge fashions, a change from the women’s clothing chain’s more conservative lineup, Chief Executive Officer David Dyer said.
While Chico’s and its White House Black Market label feature tailored suiting and clean lines, Boston Proper sells red off-the-shoulder tops and fur-embellished sweaters. The chains both market to affluent, college-educated women 35-years- old to 55-years-old, Dyer said.
“This is a market niche we needed to get involved in, and this brand is a tremendous growth opportunity for us,” Dyer said today in an interview. “We can double their business.”
The $205 million acquisition will be funded from available cash and will add to earnings in its first year, before taking into account any possible synergies, Fort Myers, Florida-based Chico’s said today in a statement.
Closely held Boston Proper, a direct-to-consumer business with a catalog and website, focuses on creating junior fashion trends in “appropriate” cuts to flatter older women, said Sheryl Clark, the company’s chief executive officer. The Boca Raton, Florida-based chain sold $110 million in clothing last year, and has increased sales every year since 2008.
Chico’s, which also owns Soma Intimates, has 1,250 locations and may expand to 800 more, Dyer said.
Doubling Boston Proper’s sales under Chico’s is “plausible,” said Adrienne Tennant, an analyst at Janney Capital Markets in New York. Other direct-mail competitors such as Talbots Inc. (TLB) have comparable sales, she said.
“The nice thing about Boston Proper is that it doesn’t directly compete with Chico’s current customers,” Tennant said in a telephone interview. “There is certainly a little more cutting-edge fashion there.”
Chico’s fell 42 cents, or 3.3 percent, to $12.19 at 1:41 p.m. in New York Stock Exchange composite trading. The shares had gained 4.8 percent this year before today.
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