M&A Watch: Same Story, Different Year... Revisiting Syms & Filene's As Bait (SYMS)

If there is a story that retail and apparel investors will think they have seen before, it is on Syms Corp. (NASDAQ: SYMS).  Shares are surging by over 25% this morning on news that Syms is exploring and evaluating strategic alternatives.  This announcement is being taken as a prelude to a sale, but investors need to be aware we’ve seen derivations of this story before and not just once.

For those of you who don’t know Syms, think of Filene’s and Syms for discount clothing.  Also think of it as a smaller version of TJX Companies, Inc. (NYSE: TJX) stores like T.J. Maxx and Marshall’s.  Here you can buy suits, shoes, clothing, and other outerwear at extreme discounts.  The company has 47 “off-price” stores under the Syms and Filene’s names.  It also recently closed on the sale-leaseback of a property located in Rockville, Maryland.

This morning came the announcement that Syms’ Board of Directors has started to explore and evaluate various potential strategic alternatives and that it hired Rothschild Inc. as its advisor in connection with the strategic review.  No defined path has been stated, but Syms did note that the strategic alternatives may include a possible sale.  The company also disclosed that no timeline is defined and that there are no assurances that any strategy will emerge. 

All you have to do is consider how long Syms has been around.  The company has been public since the 1980’s.  Its shares have not won from the great growth of America.  All we have seen was a one-time dividend of $1.00 back in 2005. It seems a million years ago, but Syms has been listed before in the media as a strategic play where the company could have the value of its New York and other company-owned land sold off for just about the entire value of the company. 

Over 5 years ago Syms stock was above $20.00. Even after a 25% rise today, the shares still sit under $9.50.  Keep in mind that this was barely a $100 million market capitalization before the announcement and it is an extremely thin-volume stock.  Still, not all is bad.  With all of the M&A in apparel and retail in private equity, you’d think that Syms really could find a buyer this time around now that the stock trades at less than its real book value.

JON C. OGG