After spending $218 million just three years ago to acquire Crosstown Traders, Charming Shoppes Inc. is selling the catalog and e-commerce brands at a bargain-basement price.
To reinvigorate and refocus on its core business of plus-size women’s apparel, Charming Shoppes, No. 103 in the Internet Retailer Top 500 Guide, sold its Crosstown Traders properties, including Old Pueblo Traders, Bedford Fair, Willow Ridge, Lew Magram, Brownstone Studio, Intimate Appeal, Monterey Bay Clothing Co. and Coward Shoe, to Orchard Brands for $35 million in cash. In a separate but related transaction, Charming Shoppes also sold its misses apparel catalog credit card receivables for approximately $40 million in cash to Alliance Data Systems Corp. The receivables are directly related to the catalog titles being sold to Orchard Brands, the retailer says.
Orchard Brands, No. 60 in the Internet Retailer Top 500 Guide and a unit of Golden Gate Capital, already operates several other apparel brands, such as Appleseed’s, Blair, Draper’s & Damon’s, Gold Violin, Haband, Norm Thompson, Sahalie, Solutions, Tog Shop, and WinterSilks. Orchard Brands is making the deal to further carve out its niche in selling apparel to mature consumers.
“We are extremely pleased to be adding these important titles to our own strong portfolio of direct-to-consumer businesses,” says Orchard Brands CEO Neale Attenborough. “We look forward to incorporating the established and highly regarded Crosstown Traders’ brands into the group, as they significantly increase our penetration of the 55+ market.”
Charming Shoppes, which acquired Crosstown Traders in June 2005 for cash and the assumption of a debt of $40 million, made the deal to transition itself into a bigger direct market and e-commerce player. “The acquisition of Crosstown Traders enables us to enter a new sales channel to quickly and meaningfully advance our strategy for growth as a multi-channel retailer,” Charming Shoppes said three years ago.
But in March, to help bolster its faltering financial position and concentrate solely on its plus-size women’s apparel business, Charming Shoppes made the decision to sell certain non-related businesses and assets. In addition to selling Crosstown Traders, Charming Shoppes in May sold its Memphis distribution center for $4.8 million and is looking for a buyer for its Figi’s Gifts in Good Taste catalog business, which is based in Wisconsin. “We are pleased to enter into this agreement with Orchard Brands,” says Charming Shoppes interim CEO Alan Rosskamm. “We have made the decision to sell our non-core catalogs as key steps in our strategy to focus on our core brands -- Lane Bryant, Fashion Bug and Catherines -- and leverage our leading market share position in women’s specialty plus apparel.”
The current fiscal year has been a challenging one for Charming Shoppes, which recorded e-commerce sales of $137 million in 2007. In Q2 ended Aug. 2, Charming Shoppes posted a loss from continued operations of $3.7 million on sales of $648.6 million vs. income from continuing operations of $20 million on sales of $694.4 million in the prior year. In July Rosskamm replaced long-time CEO Dorrit J. Bern.
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