TJX and Bluestar considering acquiring Jones New York

TJX Cos Inc., the parent company of TJ Maxx, and Bluestar Alliance, the brand management firm, are both eyeing Jones New York for an acquisition. Last month when Jones New York announced that they would be shuttering the doors on all operations both TJX and Bluestar pleaded to private equity firm Sycamore Partners to get their hands on the brand. Discussions as to what the next steps Sycamore Partners will take in the Jones New York acquisition case are only preliminary and explorative with no confirmation of what will happen next.

Last year, Sycamore Partners bought Jones New York as part of the deal when they bought their parent company The Jones Group for 2.2 billion dollars. While the brand is still being sold at retail they are slowly winding down operations and expected to be completely dealt away with by the end of 2015. When Sycamore bought The Jones Group the valuation placed on it was north of 400 million dollars.

While the current asking price for the brand is 400 million dollars due to the shuttering of so many operations and the brand only operating at the retail level the valuation of the brand is estimated at only 100 million dollars, and could potentially be worth even less than that. This is because any buyer would only be purchasing the intellectual property rights for the brand and not an actual business operation.

Jones New York being eyed for potential acquisition

TJX is definitely looking to expand though, and is trying to work on acquisitions wherever they can. In 2012, the retail company bought off-price online retailer Sierra Trading Post for 200 million dollars. TJX’s claim to fame is selling department store brands at heavily discounted prices. While Jones New York would be in a strange predicament because they will no longer have a wholesale presence in mid-range to higher end department stores TJX could turn them into a recognizable private label and turn the whole brand around.

Walter Loeb, a retail consultant and president of Loeb Associates and former retail analyst, was quoted in Women’s Wear Daily saying: “An acquisition of JNY by TJX would make sense. TJX wants to be more like a department store. It’s doing about $29 billion in annual volume, so it’s not so small a company anymore. They want recognizable brands that the customer knows, and JNY is still a brand that is recognized.”

Bluestar, on the other hand, would have a far more complicated time trying to acquire Jones New York. First, the brand would need to find an operating partner. A feat that wouldn’t be too impossible, as rumor once had it Li & Fung Ltd. was once named as a potential acquirer of brands, and while they have shifted focus away from the U.S. their brand operator division U.S., Global Brands Inc. could take on the role of operating partner under a license agreement. Jones New York could be acquired by other company’s aside from TJX or Bluestar, but not too many people would be eyeing them unfortunately.

Because the brand is very focused on women’s work wear and does not have a large international presence this limits the pool of buyers. Most companies don’t want to acquire a brand that does not have a powerful global presence. Traditional women’s work wear is also a shrinking category with people turning more towards professional attire that can both be dressed up for the office and dressed down for more casual events.

The future of Jones New York is very much influx, and there is no telling what could happen with the brand next. As they begin to slow down operations they could be bought at any minute, or could be shuttered completely. There are still those fans who still love more traditional work wear so there is still a market for them out there, it is probably best that they reevaluate how they do business and downsize for their smaller market before they disappear entirely, but they may find a lovely home at TJ Maxx.