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Why Shares of Chico's FAS, Inc. Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Chico's FAS, Inc. (NYSE: CHS  ) jumped as much as 11% and finished up 8% on reports that the company is considering selling itself.

So what: According to the Financial Times, the womenswear chain has chain has met with several private equity firms in recent weeks, though the nature of those talks is unclear, as Chico's could be interested in selling part of the company or the whole thing. Research firm Stifel said the buyout price could be in the neighborhood of $3.2 billion, or 30% above today's closing price.   

Now what: Like most companies exploring a private-equity sale, Chico's has stumbled upon tough times. Shares are down more than 20% since January, and the company has reported four straight double-digit earnings drops as several apparel retailers have struggled as consumer tastes appear to be shifting. The Financial Times article stressed that the talks were preliminary, but rumors of a sale are always a surefire way to generate a bump in the stock. Until more news comes out, the report should put a floor on Chico's shares at the very least.

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Jeremy Bowman

Fool since 2011. I write about consumer goods, the big picture, and whatever else piques my interest. Follow me on Twitter to see my latest articles, and for commentary on hot topics in retail and the broad market.

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Related Tickers

9/2/2015 12:53 PM
CHS $14.97 Up +0.09 +0.60%
Chico's FAS, Inc. CAPS Rating: ***