Linens N Things Ponders Sale

Clifton, NJ, September 16, 2005–Shares of Linens N Things rose to a new 52-week high Wednesday on news that the company may put itself on the market.

Citing an unnamed source, Financial Times reported Wednesday that Linens N Things is working with Credit Suisse First Boston to “examine its options,” including a possible sale.

The company’s stock jumped $3.66, or 12.4 percent, to $29.60 in earlier trading on the New York Stock Exchange–trumping a previous high of $28.91. Trading volume surged to 5.2 million, compared with a daily average of about 489,000. After sinking to a 52-week low of $21.10 in June, shares have risen sharply this month on speculation about a possible sale.

SunTrust Robinson Humphrey analyst David Magee said a soft economy in the home category, as well as increased competition from larger retailers Wal-Mart and Target, have left Linens N Things on shaky ground.

“If you look at the company, it’s attractively valued,” he said. “It averages around $2 a share per year in cash, it has no debt and is in a category that, over time, has pretty stable growth characteristics. It should be interesting to a private equity buyer or retailer.”

He declined to speculate on possible buyers.

Linens N Things recently started a turnaround initiative: The company is introducing a proprietary line designed by Nate Berkus. The strategy is akin to what Target has done — successfully — with its line by designer Isaac Mizrahi.