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Francesca outshines Lululemon in luring private equity bids

August 29
10:29 AM 2013

In the midst of dismal earning reports of retailers, Francesca's Holdings Corp. shone as the most attractive takeover bid to date. According to Bloomberg compiled data, Francesca bested Lulemon, noting positive figures for the women's boutique operator. 

Analysts had projected an 80% spike in sales at USD533 million for Francesca's in the next three years. The retailer is currently selling women's apparel, shoes and bags via its 438 upscale-type stores across the US. Moreover, the company is poised to incur free cash flows of about USD50 million this fiscal year and do not have debt. Current operating margin is at a 26% premium compared to 95% of its co-retailers.

Avondale Partners analyst Mark Montagna said, "Such strong cash flows would enable private equity to take them private and load the company up with debt." FBR & Co. analyst Susan Anderson said that bid offers would be priced as much as 30% premium at USD30.50 per share. Macquarie Group analyst Liz Dunn concluded that Francesca's has been run well. 

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