Redcats USA acquires United Retail Group Oct 1, 2007 12:00 PM
, By Jim Tierney
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Could Redcats USA be contemplating retail? The multititle cataloger announced on Sept. 11 it bought plus-size women's apparel retailer United Retail Group for $198.9 million, or $13.70 per share in cash. Both companies' boards of directors approved the deal, which is expected to close by the end of the calendar year.
Rochelle Park, NJ-based United Retail Group operates 483 Avenue stores along with the Avenue.com Website. New York-based Redcats USA is a catalog division of French conglomerate Pinault-Printemps-Redoute (PPR). Its brands include Chadwick's, Roaman's, Woman Within, Jessica London, KingSize, and BrylaneHome.
As part of the deal, United Retail Group Chairman/CEO Raphael Benaroya will tender all of his shares to Redcats USA. After the sale is completed, Benaroya and George R. Remeta, United Retail Group's vice chairman/chief administrative officer, will remain with the company for a transition period of at least one year.
Neither Redcats USA nor United Retail Group would comment. But a likely factor in the deal is that Redcats lost its Lane Bryant catalog this year, when the trademark to that title reverted back to Bensalem, PA-based retailer Charming Shoppes. Charming Shoppes has owned and operated the Lane Bryant stores since 2001. What's more, this is not the first time the two apparel marketers have teamed up. Redcats developed an 84-page Avenue catalog for United Retail in March 2006. (Avenue had mailed an apparel book for nearly three years before closing the title in 2003.)
Claire Gruppo, president of New York-based investment bank Gruppo, Levey & Co., believes the deal will benefit both sides. “From a strategic perspective, I think it could be great,” she says. “Obviously, Redcats is a very sizable multititle cataloger and Internet seller of women's apparel and has a similar demographic. Avenue is a little younger, hipper, urban, and primarily a retail channel.”
Still, Gruppo notes, “I was surprised Redcats was interested in a company with such significant retail presence, but why not?” Redcats' growth in catalog marketing “is flat and may be declining slightly,” she adds. “To go into another channel is smart.” Plus, the deal can help Avenue finally crack the catalog market. “United Retail Group has been trying for a long time to get into various direct channels effectively,” Gruppo says.
