Wickes Cos. said Thursday that it plans to sell three major divisions--a lumber retailing chain and two apparel units--and use the proceeds to pay off debt and buy back common stock.
The Santa Monica-based conglomerate said it expects to realize "substantially more than book value" for the businesses, which Wickes said totaled about $600 million. In 1986, the three units--Wickes Lumber and Kayser-Roth hosiery and apparel--had combined revenue of about $1.8 billion and operating income of about $80 million.
The sales would eliminate Wickes' apparel and hosiery business, leaving it with three main segments: the retailing of building materials and home improvement items through Builders Emporium and other chains, the manufacture of wall coverings and furnishings, and the manufacture of automotive and industrial products. Those remaining divisions accounted for about $3.6 billion in 1986 revenue.
"It (the sale) is positive, in that they'll be able to resolve a major concern on the part of investors, and that is the degree of leverage," said Anthony Pearce-Batten, an analyst with the Baltimore investment firm of Legg Mason Wood Walker. "Wickes' stock has been battered (by the market turmoil). But by the same token, this doesn't look like the best environment in which to sell assets."
Unrelated to Market
In composite trading on the New York Stock Exchange on Thursday, Wickes shares closed at $8.50, down $2.25.
Wickes Chairman and Chief Executive Sanford C. Sigoloff said in a telephone interview that the sale of units had been planned for some time and was not related to the current uproar in the stock market. Sigoloff declined to say whether any buyers were in the wings, but noted: "Those units have always had companies saying, 'If you ever want to sell this, think of me.' "
Sigoloff, who said the decision to sell the units was completed at a board meeting Monday, said the company would most likely put an emphasis on repaying debt, although he said Wickes has "the capacity to buy a lot of stock" if that option appears more attractive based on market conditions.
So far this year, the company has reduced debt by more than $300 million, Sigoloff noted. Debt now stands at $1.9 billion.
Wickes Lumber is a leading retailer of lumber and building materials through more than 225 locations nationwide.
Kayser-Roth's clothing side manufactures apparel under the Catalina, Cole, Cheryl Tiegs and Adrienne Vittadini brand names. The hosiery unit makes products for men and women, including No Nonsense panty hose; Calvin Klein, Liz Claiborne and Leg Looks by Burlington panty hose, and Arlington, Adler and Levi socks.