Saks Fifth Ave on the block, could your favorite retailer be next?
Barnes & Noble, Aeropostale and BJ's Wholesale all belong to a group of well-known retailers that may be purchased by private investors (i.e. private equity companies). All of these retailers are considered undervalued or have some underlying value thanks to brand equity or property, and all get mentioned in reports on the subject.
Business publications like DailyFinance the Wall Street Journal are reporting that a consortium of private equity investors could offer as much as $1.6 billion for Saks, although no suitor has been named. Saks has two large shareholders that will have a huge say in the deal. One, in particular, Carlos Slim Helu, has a history of taking over, or trying to take over, struggling retailers. Slim is the wealthiest man in the world, although not well known to the average American. His holding company, Grupo Carso owns various retailers. Grupo Carso's Sears de Mexico purchased CompUSA in 2000 and has made more than one attempt to take over Circuit City before its demise.
Grupo Carso isn't mentioned in the reports as one of Saks potential bidders, but it's worth noting that when private equity takes over a brand, that brand, like CompUSA, is never the same. Musicland Stores, already in trouble before Sun Capital Partners bought it in 2003, closed a bunch of locations and in turn sold out to Trans World Entertainment. That company, in turn, closed a bunch of stores and renamed others. Musicland and Sam Goody are now just faded memories.
Pundits like to say that fewer stores is better for consumers, but only in the way that healthier businesses are better for consumers in a very general "the economy is better" kind of way. Less competition is never good and certainly, the loss of a favorite store or treasured brand can have a negative psychological impact. At the very least, it triggers nostalgia. Sharper Image, Marshall Fields, Circuit City, all went away for one reason or another. And all still have some very impassioned customers that mourn their passing.
Whether Saks is on that list is still unknown. But if it is acquired, chances are good it will change quite a bit. Will it matter?