Private equity firm Sycamore Partners is preparing a $3 billion to $3.5 billion bid for Belk department stores, sources have told Reuters.
As one of the South’s major department stores, Belk recently disclosed it was interested in a sale. Sources told Reuters that TPG Capital LP, KKR & Co LP (KKR.N), Bain Capital LLC and Golden Gate Capital had all considered offers.
Charlotte, NC-based Belk was founded in 1888 by William Henry Belk and remains in private ownership by the Belk family, with 297 stores in 16 Southern states.
Although family-owned Belk is confined to the South, it is suffering much of the sluggish sales and penchant for heavy discounting of its national, publicly held counterparts. And like them, it has largely lost the enchantment of its beginnings in the 19th century and its hey-day in the mid-20th century, when department stores were known for an extensive and appealing range of merchandise and stellar customer service.
Sycamore Partners has extensive retail holdings, including specialty retailers Aeropostale, Coldwater Creek, Jones New York, Hot Topic, and Talbots, and an acquisition of Belk would be their largest yet. In the fiscal year ending January this year, Belk reported $4.1 billion, up 1.8% from 2014.
It could bode well for Belk. The private equity firm would likely smooth the past to increased web and omnichannel services and could perhaps expand its off-price outlets, which has special appeal for department store retailers lately, for good or for ill. But Belk could also lose its local flavor, and it’s another sign that the American department store is not what it once was.