Three Years on, J. Crew Owners Look to Explore Options (KORS) (BURL)

March 5, 2014 3:47 PM EST
Amid a swarm of high-profile tech IPOs over the last few years, the next hot offering might come from outside the sector.

Bloomberg reported on Wednesday that TPG Capital and Leonard Green might look to sell J. Crew Group, the retailer it acquired in 2011, in deal with Japan's Fast Retailing Co or the private equity firms might decide to take the company public via a $5 billion IPO.

An offering at $5 billion would value J. Crew at three times the industry median revenue multiple and be the largest apparel IPO in history.

J. Crew selling for $5 billion would be about double with TPG and Leonard Green paid for the time and value the retailer at 2.1 times its estimated $2.4 billion in sales for its most recent fiscal year (ending last February). That valuation would also be about 14 times adjusted EBITDA. The retail industry average revenue multiple is 0.6 times and adjusted EBITDA at 8.5 times.

J. Crew was said to have about 0.7 percent of the U.S. retail market, while Fast Retailing boasted around 0.1 percent.

Other examples of apparel IPOs that have performed well include Michael Kors (NYSE: KORS), which is up nearly 500 percent since its debut, and Burlington Stores (NYSE: BURL), which has gained 57 percent.

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IPOs, Insiders' Blog, Private Equity

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J. Crew/TPG Capital and Leonard Green & Partners, IPO

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