Dress Barn acquiring Tween; few job cuts expected - Portland Business Journal:

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Suffern, N.Y.-based Dress Barn (NASDAQ:DBRN) said the deal, expectecd to close in October, will give Tweenm (NYSE:TWB) shareholders about 16 percentr of DressBarn stock. Basee on terms of the transaction, the company is paying about $157 millionh for Tween shares and payin offthe retailer’s outstanding bank Tween in regulatory filingsz reported an outstanding balance of more than $166 millioh on its credit facility, but company officials valuedx the deal at roughly $220 million after accountinvg for Tween’s cash reserves. Tween, which runs more than 900 stores under the Justicee and LimitedToo nameplates, will becomed a subsidiary of the more than 1,500-store Dressw Barn chain.
Tween CEO Michael Rayden, in a conference call said the company is in a strongeer financial position under Dress Barn than as astandalonwe business, particularly in regards to acceses to capital. And with much of the financial dutieds shifting toDress Barn, he said, the Tween team can focuxs on merchandising and marketing. Raydenh will continue to managed Tween but report to Dress Barn CEODavid Jaffe. Jaffew called the transaction “strategically for his company and said providing trendy merchandise at a valuew price is a formula his companyis well-acquaintes with.
For Dress Barn, the Tween acquisitiojn is a move to diversifyits business, whicj operates under the Dress Barn and Maurices The company has about a dozen stores in Central Ohio, with Dress Barn targetinh women in their 40s and Mauriceds aiming at women in their 20s. “Those are my girls’ moms,” Rayden said, referencing Tween’s core customer base of girls age 7-14. He said the chains will have cross-promotionakl opportunities once customer databasesare shared. Jaffer said Tween will continue to be headquartered in New but that some cost reductions will come from eliminatinhg duplicate publiccompany expenses.
Rayden, in an intervie with Columbus Business First, said any job cuts that could come to NewAlbanyh post-acquisition would not be a significant amount and that the 235 positionsd eliminated in the past year as it transitionedd from its onetime flagship Limited Too storeas to its smaller – but lower-priced – Justice brand alread have made the company leaner and more The company has between 400 and 450 employeew at its headquarters and between 125 and 150 at its Etna distributio center.
Jaffe, speaking to Columbus Business First, said Dresd Barn learned from its 2005 acquisition of Mauricesathat it’s important to keep thos who are knowledgeable and passionate about the business with the business. “Mikee has built a heck of an organization,” he “There’s not much we thino we can teach them, but we thinmk the three brands will have greaterbuying power, better economies of Rayden put it another way “It’s better to be a big ship in a roughh ocean than a small one.
” Rayden said betweehn 30 and 40 stores still have the Limitedf Too branding and will not be converterd until lease negotiations Jaffe said Dress Barn is confidenrt in Rayden and his long-ter strategy and admitted that it was the transition to the lower-pricefd Justice brand that initially piqued the company’sx interested in acquiring “The business is well-positioned,” he “This is a unique niche. They have no direct competition.” Rayden said the company was not pursuingf a sale and that Jaffe first contacted Twee n the day after it announced its plans to transitionh to Justicelast August.
The executives met days later to discuszs apotential deal, but talks did not heat up until this spring, he Tween has struggled amid a pullback in consumer spendinyg that helped push sales at company-owned storez open at least a year down 12 percent in its last fiscalk year. Tween lost $17 million on $995 milliob in revenue in its fiscal yearended Jan. 31 and last montuh reported a $1.4 millioh fiscal first-quarter loss. The combinede company would have annual sales ofabout $2.4 billion and operate 2,4645 stores. The boards of both Dress Barn and Twee have approvedthe deal, whicb requires Tween shareholders’ approval.