Tuesday, November 23, 2010

Industry Thoughts | After J. Crew

UPDATE I: I've added pieces on the J.Crew deal from various publications here. Enjoy articles from PEHub, the WSJ's Deal Journal, and all three DealBook pieces (so far).
UPDATE II: Thanks to Dan Primack at Fortune for finding this CNBC piece by John Carney on the relationship between TPG and J. Crew 

Wow, 2 posts in one day. I feel so productive.

...but the main reason I'm writing another is because of Andrew Ross Sorkin's DealBook piece on who's next after J.Crew. Paul Lujenez of Nomura lists Abercrombie & Fitch and Ross Stores as 2 top buyout places with Lululemon Athletica and Tiffany & Co. rounding out the list. Some quick big-picture thoughts on each:

  • Abercrombie: The company seems to keep bleeding cash. Case in point: watching countless tourists walk into the 5th Ave. store but few actually buy anything. It would make sense for a Leonard Green-style firm to take it over, it really needs help.
  • Ross: Well balanced, especially with more consumers moving towards the TJ Maxxes and Marshalls as their primary clothing places. Good call.
  • Lululemon: The company has nowhere to go but up. Simple business model, and the yoga trend won't die anytime soon, it actually has a chance to grow exponentially if it can be a more popular workout for people who are significantly overweight and are looking for a good and gradual entry to burning it off.
  • Tiffany: Not much room for growth/expansion. CEO Michael Kowalski has done a great job on the restructuring front.
One area I think would be great for buyout firms? Smaller, Europe-based firms (like Cath Kidston) that haven't expanded to the USA yet and have distinguished themselves from other specialty retail firms. I really can't think of any other retail firms that just seem attractive right now...


2 comments:

Anonymous said...

Dan's at Fortune, not Forbes...

SS said...

Yikes, thank you! Silly mistake I made...