NEW YORK – Federated Department Stores has reached two separate agreements to sell its Bridal Group, with Houston-based Men’s Wearhouse making off with the 511-store After Hours Formalwear business, which includes Mr. Tux stores in New England, for approximately $100 million.
An affiliate of Leonard Green & Partners LP agreed to purchase the 269-unit David’s Bridal and 10-store Priscilla of Boston unit for about $750 million.
While Federated has disposed of many of the department stores, such as Lord & Taylor, picked up when it acquired archrival May Department Stores Co. last year, the Bridal Group, with its smaller specialty stores, many of them outside of malls, has been a more difficult matchmaking challenge. Men’s Wearhouse was immediately the subject of speculation when the Bridal Group went on the block, but market sources consistently have said that MW wanted neither the high price tag nor the integration challenge of picking up the David’s Bridal business, which specializes in the sale of wedding gowns and bridal accessories.
The two deals should provide Federated with $750 million on an after-tax basis. They’re expected to be finalized during the first quarter of fiscal 2007, pending regulatory approvals.
George Zimmer, founder, chairman and chief executive of Men’s Wearhouse, said in a statement, “Combining the Men’s Wearhouse and Moores brands’ 654 U.S. and Canadian locations, which rented over 1 million tuxedos last year, with After Hours 511 stores, we will have 1,165 locations that have an estimated baseline volume of three million tuxedo rental units in North America. We firmly believe we can integrate the two organizations during 2007 and realize significant benefits for shareholders beginning in 2008 and beyond.”
After Hours’ exclusive relationship with David’s Bridal will be extended to MW and Moores following consummation of the transactions. After Hours’ management and its 4,200 employees will be integrated into the MW organization.
Terry Lundgren, chairman, president and CEO of Federated, said, “While the Bridal Group did not fit with Federated’s strategy for focusing on the nationwide Macy’s and Bloomingdale’s brands, we do believe these businesses have a promising future under the ownership of Leonard Green and Men’s Wearhouse. We look forward to a continuing relationship between Macy’s and David’s Bridal, with Macy’s being the exclusive department store wedding gift registry partner with David’s.”
The news came just two days after Men’s Wearhouse reported higher earnings and sales for the third quarter but issued a cautious fourth-quarter forecast. For details, click here.