- Executes Long-Term Services Agreement For Private Label Credit Card
- Company Schedules Second Quarter Sales And Earnings Conference Call For
August 26, 2009
BENSALEM, Pa., Aug. 13 /PRNewswire-FirstCall/ -- Charming Shoppes, Inc.
(Nasdaq: CHRS), a leading multi-brand apparel retailer specializing in women's
plus apparel, and Alliance Data Systems Corporation (NYSE: ADS), a leading
provider of loyalty and marketing solutions derived from transaction-rich
data, today announced an agreement for the sale of Charming Shoppes' (the
"Company") credit card receivables program to Alliance Data Systems
Corporation ("Alliance Data"). Charming Shoppes and Alliance Data have also
entered into a ten-year operating agreement for the servicing of Charming
Shoppes' private label credit card receivables program. The Company expects
the transaction to close before the end of the year, subject to attaining
certain customary regulatory approvals.
Charming Shoppes expects to receive net cash proceeds of approximately
$110 million related to the transaction. The transaction consists of the sale
of Charming Shoppes' private label credit card portfolio, along with certain
other assets and liabilities that are required to support these card programs,
including Charming Shoppes' consolidated balance sheet asset "Investment in
Asset-Backed Securities." Gross proceeds from the transaction are estimated at
$140 million. Approximately $30 million will be utilized to fund the
termination of contractual obligations related to the transaction and exit
Charming Shoppes' Investment in Asset-Backed Securities are held on its
consolidated balance sheet. Its off-balance sheet Series 2004-1 and Series
2007-1 securitization funding facilities are currently held in the Charming
Shoppes Master Trust. Alliance Data will assume the operation of this Trust
and all funding responsibility in support of the credit card receivables
Under the terms of the operating agreement, Alliance Data will assume
operation of Charming Shoppes' private label credit card programs. This
includes the operation of the Lane Bryant, Fashion Bug and Catherines credit
card programs, which combined represent approximately 4.5 million active
accounts generating approximately $680 million of annual credit sales, or 32%
of the Company's retail stores nets sales for the trailing 12 months.
Alliance Data will provide private label credit card services including
account acquisition and activation; card authorization; private label credit
card issuance; statement generation; remittance processing; customer service
functions and marketing services, as well as receivables funding.
To ensure continuity in customer service and collections, Alliance Data
plans to maintain and operate Charming Shoppes' existing Milford, Ohio
facility, effective with the closing of the transaction. Charming Shoppes will
continue to manage credit marketing strategy for its retail brands from its
Bensalem, Pennsylvania headquarters.
Jim Fogarty, President and Chief Executive Officer of Charming Shoppes,
Inc. commented, "We are extremely pleased to enter into this agreement with
Alliance Data. Upon closing, the benefits of this transaction to Charming
Shoppes and our shareholders will include:
- Further focus on our core business;
- Removal of financing risk associated with our credit card receivable
securitization program and the credit risk of the underlying credit
- A projected $110 million reduction in our net debt position to
approximately $50 million as of the end of our third quarter, and the
attendant strengthening of our liquidity and financial flexibility;
- Achievement of these benefits in a non-dilutive transaction; and
- Partnering with one of the country's premier credit card providers.
Fogarty continued, "We view our private label credit card program as an
integral component of our retailing strategy, and we place a high value on our
relationship with our customers. With Alliance Data as our strategic partner,
we believe we can continue to offer our customers superior service."
Eric M. Specter, Executive Vice President and Chief Financial Officer of
Charming Shoppes, Inc. commented, "Following the closing of this transaction,
we expect to record a decrease in our net debt as a result of an increase in
our overall cash position by approximately $110 million. This transaction
results in the monetization of our Investment in Asset-Backed Securities,
which have been recorded as a current asset on our consolidated balance sheet.
As to our income statement, the Company will receive annual payments from
Alliance Data, based on credit sales generated by the private label credit
card portfolio, resulting in the transaction being non-dilutive. These
payments are expected to substantially replace the Company's net credit
contribution related to its credit card portfolio. Alliance Data will assume
the obligation to operate the Charming Shoppes Master Trust, through which our
credit card receivables are financed. Therefore, we will have no further
financing obligations with respect to our credit card program."
BofA Merrill Lynch and Barclays Capital served as financial advisors to
Charming Shoppes, Inc. on this transaction.
Second Quarter Sales And Earnings Conference Call
Charming Shoppes will host its second quarter sales and earnings
conference call on Wednesday, August 26, 2009, at 9:15 a.m. eastern time.
Second quarter and first half results will be released over the newswires and
will be available on Form 8-K prior to 9:15 a.m. eastern time. Both the
second quarter earnings release and the Form 8-K will be available at
Jim Fogarty, President and Chief Executive Officer and Eric M. Specter,
Executive Vice President and Chief Financial Officer of Charming Shoppes, Inc.
will comment on the Company's second quarter results and today's announcement.
Prepared remarks will be followed by a question and answer period.
To listen to the conference call, please dial 877-407-8293 approximately
10 minutes prior to the scheduled event. The conference call will also be
simulcast and rebroadcast at
general public is invited to listen to the conference call via the webcast or
the dial-in telephone number. A transcript of prepared remarks for the
conference call will be accessible at
to 9:15 a.m. eastern time on Wednesday, August 26, 2009.
The conference call will be recorded on behalf of Charming Shoppes, Inc.
and consists of copyrighted material. It may not be re-recorded, reproduced,
transmitted or rebroadcast, in whole or in part, without the Company's express
written permission. Accessing this call or the rebroadcast constitutes
consent to these terms and conditions. Participation in this call serves as
consent to having any comments or statements made appear on any transcript,
broadcast or rebroadcast of this call.
About Charming Shoppes, Inc.
Charming Shoppes, Inc. (Nasdaq: CHRS) is a leading multi-brand specialty
apparel retailer primarily focused on plus-size women's apparel and the parent
company of four distinct store brands - Lane Bryant, Fashion Bug, Catherines
Plus Sizes and Petite Sophisticate Outlet. At August 1, 2009, Charming
Shoppes, Inc. operated 2,258 retail stores in 48 states under the names LANE
BRYANT , LANE BRYANT OUTLET , FASHION BUG , FASHION BUG PLUS , CATHERINES PLUS
SIZES , and PETITE SOPHISTICATE OUTLET . The Company also operates the Figi's
Gifts in Good Taste catalog, specializing in holiday fare, gift-giving
convenience, and exclusive and personalized items. Headquartered in Bensalem,
PA, Charming Shoppes employs approximately 28,000 employees worldwide. Please
visit www.charmingshoppes.com for additional information about Charming
About Alliance Data
Alliance Data (NYSE: ADS) and its family of businesses is a leading
provider of loyalty and marketing solutions derived from transaction-rich
data. Through the creation and deployment of customized solutions that
measurably change consumer behavior, Alliance Data helps its clients to create
and enhance customer loyalty to build stronger, mutually beneficial
relationships with their customers. The Company manages millions of customer
relationships for some of North America's largest and most recognizable
brands, helping them grow their businesses and drive profitability.
Headquartered in Dallas, Alliance Data employs approximately 7,000 associates
at approximately 50 locations worldwide. Alliance Data is a leading provider
of marketing-driven credit solutions, and is the parent company of Epsilon , a
leading provider of multi-channel, data-driven technologies and marketing
services, and LoyaltyOne(TM), which owns and operates the AIR MILES Reward
Program, Canada's premier coalition loyalty program. For more information
about the company, visit its web site, www.AllianceData.com.
Safe Harbor Statement
This press release contains and the Company's conference call will contain
certain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 concerning the Company's operations,
credit card receivables program, 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: the failure to
consummate our announced transaction with Alliance Data, the failure to
continue receiving financing at an affordable cost through the availability of
our credit card securitization facilities and through the availability of
credit we receive from our bankers, suppliers and their agents, the failure to
realize the benefits from the sale of our credit card program to, and the
operation of our credit card program by, our third-party provider, the failure
to consummate our identified strategic alternatives for our non-core assets,
the failure to effectively implement our planned consolidation, cost and
capital budget reduction plans and store closing plans, the failure to
implement the Company's business plan for increased profitability and growth
in the Company's retail stores and direct-to-consumer segments, the failure to
effectively implement the Company's plans for a new organizational structure
and enhancements in the Company's merchandise and marketing, the failure to
effectively implement the Company's plans for the transformation of its brands
to a vertical specialty store model, the failure to achieve increased
profitability through the adoption by the Company's brands of a vertical
specialty store model, the failure to achieve improvement in the Company's
competitive position, changes in or miscalculation of fashion trends, extreme
or unseasonable weather conditions, economic downturns, escalation of energy
costs, a weakness in overall consumer demand, the failure to find suitable
store locations, increases in wage rates, the ability to hire and train
associates, trade and security restrictions and political or financial
instability in countries where goods are manufactured, the interruption of
merchandise flow from the Company's centralized distribution facilities,
competitive pressures, and the adverse effects of natural disasters, war, acts
of terrorism or threats of either, 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 31, 2009, Quarterly Reports on Form 10-Q 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.
CONTACT: Gayle M. Coolick, Vice President, Investor Relations,
Web Site: http://www.charmingshoppes.com