Will Chico’s Take Boston Proper Into Retail?

Retail stores may be in the cards for women’s apparel cataloger Boston Proper, now that cataloger/retailer Chico’s has agreed to acquire it.

In the deal announced yesterday, which is expected to close within 45 days, Chico’s will buy Boston Proper for $205 million. Boston Proper will operate as a stand-alone division within Chico’s, under the leadership of its current president, Sheryl Clark.

Chico’s recorded total sales of $1.9 billion for 2010; its direct sales were $137.4. Boston Proper’s sales for fiscal 2010 reached about $110 million. Both companies saw more than a double-digit increase over 2009 sales.

Chico’s can expand Boston Proper’s customer base in several ways, says Neil Stern, a retail analyst and senior partner for retail consultancy McMillan Doolittle. For one, Chico’s has a broader customer base that it can expose Boston Proper’s catalog and online business to, he says.

More significant, Chico’s operates 1,221 stores, so its real competency is in brick-and-mortar retail, Stern says. “It will be interesting to see if they take the brand in this direction.”

Chico’s expertise in store retailing is a bonus to Boston Proper, agrees Lee Helman, managing director for investment firm Financo. And it helps that Boston Proper will “get access to all of the Chico’s customer names for purposes of data mining and prospecting.”

Stuart Rose, managing director for investment firm Tully & Holland, also thinks Chico’s will likely introduce Boston Proper to the stores channel. What’s more, “Boston Proper gains tremendous leverage over vendors and margin improvement by tying itself to Chico’s purchasing scale,” he says.

“Boston Proper has been doing better than most women’s apparel catalogs, and with Chico’s behind them, it will give them resources and capital to expand dramatically,” Rose adds.

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