Charming Shoppes, Inc. (Nasdaq: CHRS), a leading retail apparel chain specializing in women's plus- size apparel, announced the completion of the purchase of Crosstown Traders, Inc.
On May 19, 2005, the Company announced that it had entered into a definitive agreement to purchase Crosstown Traders, Inc., a direct marketer of women's apparel, footwear, accessories and specialty gifts, from JPMorgan Partners, the private equity arm of J.P. Morgan Chase & Co. This catalog acquisition is a major step in the Company's long-term growth strategy and is expected to be accretive to earnings per share beginning in the current fiscal year.
Under terms of the agreement, Charming Shoppes paid approximately $218 million in cash for Crosstown Traders, plus the assumption of Crosstown Traders' debt of $40 million. In conjunction with the closing of the transaction, Charming Shoppes has securitized Crosstown's apparel-related accounts receivable. The majority of the proceeds of $53 million from the securitization have been used to retire Crosstown Traders' indebtedness.
The acquisition of Crosstown Traders, Inc. provides Charming Shoppes with an infrastructure for the development and expansion of the Company's Direct- to-Consumer businesses, which will include the Company's catalog and e- commerce sales distribution channels. The development of the Company's Direct-to-Consumer operation is a key step in the preparation for the launch of the Company's own catalog for the Lane Bryant brand in October 2007, when the Lane Bryant catalog trademark reverts to the Company.
Steven Lightman will continue his leadership role as President of Crosstown Traders. Lightman's career of more than 22 years in the direct marketing industry began in 1982, when he joined the Arizona Mail Order Company, the predecessor company of Crosstown Traders. With Arizona Mail Order as a platform, the Bedford Fair, Willow Ridge, Brownstone Studio, Lew Magram, and the Monterey Bay Clothing Company catalogs were acquired, and Lightman had responsibility for the integration of these catalogs.
Commenting on the completion of the purchase of Crosstown Traders, Inc., Dorrit J. Bern, Chairman, CEO and President of Charming Shoppes said, "I am pleased to complete this strategic acquisition, which strongly positions Charming Shoppes for the attainment of our goals of expanding our service to our customers, and ensuring future growth of the Company. I am very happy to welcome Steve and his organization to Charming Shoppes."
Bern continued, "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. Online selling, now available at each of Charming Shoppes' brands, is experiencing extraordinary growth, which will benefit from Crosstown Traders' operations and expanded infrastructure."
Crosstown Traders is a direct marketer of women's apparel, footwear, accessories and specialty gifts headquartered in Tucson, AZ, with additional facilities in Phoenix, AZ, Greenwich, CT, Carlsbad, CA, Wilmington, NC, and central Wisconsin. The company markets high-quality women's apparel through its Old Pueblo Traders, Bedford Fair Lifestyles, Bedford Fair Shoestyles, Willow Ridge, Lew Magram, Brownstone Studio, Regalia, Intimate Appeal, Monterey Bay Clothing Company, and Coward Shoe catalog titles. An additional catalog title, Figi's, is headquartered in Marshfield, WI, which markets food and specialty gift products.
Charming Shoppes, Inc. operates 2,235 stores in 48 states under the names LANE BRYANT(R), FASHION BUG(R), FASHION BUG PLUS(R), and CATHERINES PLUS SIZES(R). Please visit http://www.charmingshoppes.com for additional information about Charming Shoppes, Inc.
This press release contains certain forward-looking statements concerning the Company's acquisition of Crosstown Traders, Inc. and its and the Company's operations, performance, and financial condition. Such forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those indicated. Such risks and uncertainties may include, but are not limited to: failure to successfully integrate the operations of Crosstown Traders, Inc. with Charming Shoppes, Inc., the failure to implement the Company's business plan for increased profitability and growth in the plus-size women's apparel business, the failure to successfully implement the Company's business plan for Crosstown Traders, Inc., changes in or miscalculation of fashion trends, extreme or unseasonable weather conditions, economic downturns, a weakness in overall consumer demand, failure to find suitable store locations, the ability to hire and train associates, trade restrictions and political or financial instability in countries where goods are manufactured, the interruption of merchandise flow to the Company's retail stores from its centralized distribution facilities, competitive pressures, and the adverse effects of acts or threats of war, terrorism, or other armed conflict on the United States and international economies. These, and other risks and uncertainties, are detailed in the Company's filings with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2005 and other Company filings with the Securities and Exchange Commission. Charming Shoppes assumes no duty to update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.
SOURCE Charming Shoppes, Inc.
Posted June 2005
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