Five years ago, the stock price of Chico’s FAS was falling, and the women’s fashion company that had been born of humble roots with positive vibes on Sanibel Island faced a string of negative headlines.

Five years and three CEOs later, the clothing store with about 1,500 employees and three brands based in Lee County announced its sale. A $1 billion deal with New York-based private equity firm Sycamore Partners will convert Chico’s FAS from a public to private company by the end of this year, according to statements from both parties.

Both companies declined to comment beyond the transactional news and prepared statements, but Gulfshore Business interviewed Chico’s FAS’ founders and a New York City attorney who has been involved with similar deals.

“Because Chico’s is public, there’s just a lot more to these transactions than private transactions,” said Douglas Hand, a Manhattan attorney with Hand Baldachin Associates LLP. Hand was not involved in this deal, but he specializes in fashion company transactions.

“Here, the acquirer is private,” he said. “It’s a private equity firm. By taking Chico’s private after the transaction, that’s going to bring, No. 1, immediate efficiency. You don’t have to answer to shareholders. You don’t have to answer to any public entities. All of that public disclosure is very expensive.

It’s a regulated transaction, because shareholders are obligated to the information. Like in any transaction, the acquirer is looking for efficiencies. Efficiencies for increasing revenue. And there are efficiencies for reducing costs. Those are the ones you would worry about from a local perspective.”

Chico’s FAS employs about 1,500 people at its Fort Myers headquarters on Metro Parkway, making it a top-10 employer in Lee County, according to the Lee County Department of Economic Development.

Without further comment from the two parties, it’s impossible to know whether the number of Southwest Florida-based employees of Chico’s will rise or fall. It would depend on what the new owners decide as far as relocating corporate personnel to the area or cutting down the local workforce because of duplications in areas, such as marketing and finance.

“Look, if I’m the buyer—I’m Sycamore Partners—I’m not going to try to fix what isn’t broken,” Hand said. “The stores are working. They’re doing well. I wouldn’t expect any operational changes or branding changes for sure.”

There’s also a sizeable real estate component to the deal, said Matt Simmons, a property appraiser with Maxwell, Hendry and Simmons.

Simmons researched the property records and found Chico’s paid $24 million in April 2006 for an expansion of its existing campus. Chico’s paid $1 million in 1993 for its original campus parcel at 11215 Metro Parkway, acquiring it from Sam Galloway Jr. and Sam Galloway III. The company purchased land at 11100 Plantation Road for $651,000 and built a 146,000-square-foot building in 2013.

“I would be very surprised if it ends up meaning that Chico’s leaves their footprint there,” Simmons said of the real estate part of the deal. “If I’m guessing, I don’t think they’re going anywhere. I think they’re simply transitioning from being public to private. A private company has the flexibility to do things you can’t do as a publicly traded company. I’m sure Sycamore has a clear strategic plan.

“Some of their operations maybe get rolled up into the bigger entity that swallowed you up. They invest in that space. Who knows? But it’s not like Chico’s gets up and has everyone work at Sycamore’s office. That’s not how it works.”

Sycamore Partners specializes in retail and consumer investments with holdings that include brands, such as Loft, Ann Taylor, Belk, Hot Topic, The Limited, Torrid, Talbots, Aeropostale, Nine West and office supply store Staples among others.

This is a stellar deal for Chico’s, considering it had an offer from Sycamore to buy it four years ago at about a quarter of the price, Hand said.

Although retail shopping trends have shifted online, Sycamore doesn’t seem to mind, Hand said.

“Sycamore owns some other dinosaurs,” he said, “but they seem to be doing pretty well. They own Belk and Nine West.

They know this space, and they’ve obviously looked at Chico’s before. They made an offer for them in 2019 and for quite a bit less. I bet they wish they could have closed on it back then. They offered $400 million, which was lowered to $350 million. This was back in 2019, when Chico’s was really in the toilet. It ultimately wasn’t approved by the board at Chico’s. You’re looking at almost a third of today’s purchase price, back in 2019. So, they’ve had their eye on it for a while.”

The terms of the deal allow Chico’s FAS to continue courting other potential buyers, Hand said, which gave him confidence the deal will go through.

“It’s a go-shop period,” Hand said. “It’s the acquirer allowing for Chico’s to go out and shop itself and maybe go out and find a higher price. Obviously, Sycamore is pretty confident that no one is going to top that, but it’s very rare that one would allow that in a transactional setting.”

Marvin and Helene Gralnick founded Chico’s FAS in 1983. They had about 800 square feet of space at Periwinkle Place shopping center off Periwinkle Way on Sanibel. They both said time will tell what the sales means for the future of the company.

“We hope it continues as a private company and prospers,” Marvin Gralnick said. “Why we prospered? We were creative. We were visionaries and we were positive. We visualize it being very good and very positive. That’s one of the reasons we were successful.”

Helene Gralnick said she was proud their creation would continue onward. The FAS in the name, she said, stands for Folk Art Specialties.

“The bottom line is, we love Chico’s, and we always will,” she said. “We have complete confidence in the company and the leadership. The original intention of the company and the culture and the heart and the soul—it’s an amazing product. It’s been a force for good.”

Sycamore would be wise to retain CEO Molly Langenstein to continue running it, Helene Gralnick said.

On Sept. 25, 2020, the stock price dipped to 99 cents per share, records show. On Oct. 3 of this year, it had risen to $7.46.

“I think she’s outstanding,” she said. “It’s not every day you find leadership with the compassion and vision and dedication that Molly has.”