Two activist investors at Ann Inc. (NYSE:ANN), parent company of Ann Taylor and LOFT, are urging the apparel retailer to sell itself. The sale could be worth as much as $2.5 billion.
Engine Capital and Red Alder, who control "in excess of 1 percent" of Ann's stock, submitted a letter to the company's board saying it would be worth $50 to $55 per share to a private equity firm and perhaps more to a "strategic buyer," reported Reuters.
The letter came just days after Ann Taylor posted disappointing second quarter results. Sales were down 8 percent from the same quarter last year, although earnings and revenue beat analysts' expectations. Numbers were greatly attributed to slower traffic in stores and higher than anticipated promotional activity.
The letter also recommended that the retailer appoint a special committee to conduct a strategic review, noting that the committee should only consist of independent board members to appease investors "concerned about management intentions and, in particular, are aware of (CEO Kay) Krill's preference for the status quo of remaining a public company."
Engine Capital followed with a statement, saying that if the board chooses not to sell, each board member should buy back stock worth about twice their annual compensation as a sign of confidence. The statement also suggested that Ann should consider borrowing $600 million to buy back one-third of its stocks at $40 per share.
Ann Taylor predicted stagnant growth and even potential losses for the current quarter. The company's annual growth revenue was 5 percent last year, the lowest since 2010.
In spring, the company announced a strategic realignment to better integrate in-store and e-commerce as part of a larger omnichannel strategy.
Looking ahead, Ann is in the midst of opening four freestanding Lou & Grey concept stores to further its successful loungewear line.
-See this Reuters article
-See this NASDAQ article
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