Chico’s makes a proper acquisition

Specialty women’s apparel chain retailer Chico’s FAS Inc. has an appetite for growing its direct market channel, including e-commerce.

To increase the size of its direct and web business Chico’s, No. 129 in the Internet Retailer Top 500 Guide, is spending $205.0 million in cash to acquire Boston Proper Inc., a direct marketer of women’s apparel and accessories with annual web sales of $111.0 million. Boston Proper is No. 129 in the Internet Retailer Top 500.

Under the terms of the deal, Boston Proper will become a wholly owned subsidiary of Chico’s. Chico’s expects to close the deal in about 45 days. "Boston Proper has grown and thrived by offering women daring, modern fashion with a sensual feel through compelling catalogs, direct marketing campaigns and its online channel,” says Chico’s CEO David Dyer. “Boston Proper's brand focus is highly complementary to our existing brands' customer experience, adds significant volume to our direct-to-consumer channel and provides us new opportunities to grow market share.”

When the deal is complete, Boston Proper CEO Sheryl Clark will oversee the Boston Proper division as president and report to Dyer. Boston Proper founder and board chairman Michael Tiernan will retire.

At the same time Chico’s is making a key acquisition, the retailer also has reported its second quarter and year-to-date numbers.

For the second quarter ended July 30:

• Sales increased 18.5% to $551.4 million from $465.4 million in the second quarter of 2010.
• Comparable-store sales increased 12.8%.
• Net income increased 35.5% to $89.3 million from $65.9 million in the second quarter of 2010.

Chico’s didn’t release e-commerce or direct sales in its second quarter earnings press release.