Charming Shoppes strengthens its global sourcing team
Charming Shoppes, Inc., a leading multi-brand apparel retailer specializing in women's plus apparel announced the completion of the sale of Charming Shoppes' credit card receivables programs to Alliance Data Systems Corporation. As previously announced, 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. Additionally, the Company announced that it has strengthened its global sourcing team through the addition of four brand sourcing executives.
Charming Shoppes received net cash proceeds of approximately $136 million related to the credit card receivables transaction. This transaction consisted 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, and the monetization of Charming Shoppes' consolidated balance sheet asset "Investment in Asset-Backed Securities."
Gross proceeds from the transaction were approximately $166 million, of which approximately $30 million was utilized to fund the termination of contractual obligations related to the credit card receivables programs and exit costs. Previously, Charming Shoppes' Investment in Asset-Backed Securities was held on its consolidated balance sheet. Its off-balance sheet securitization funding facilities were held in the Charming Shoppes Master Trust. Alliance Data has assumed the operation of this Trust and all funding responsibility in support of the credit card receivables program.
Jim Fogarty, President and Chief Executive Officer of Charming Shoppes, Inc. commented, "We are pleased to have closed this transaction with Alliance Data. The transaction benefits Charming Shoppes and our shareholders, first, by enabling us to further focus on our core business, second, by removing the financing risk associated with both the credit card receivable securitization program and the underlying credit card portfolio, and third, by further bolstering our strong liquidity profile. We view our private label credit card program as an integral component of our retailing strategy, and continuing to deliver superior value and service to our 4.5 million active private label credit customers as key to our success. With Alliance Data as our strategic partner, we believe we can continue to deliver for our customer."
Under the terms of the operating agreement, Alliance Data has assumed the operation of Charming Shoppes' private label credit card programs for its Lane Bryant, Fashion Bug and Catherines brands. 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 will maintain and operate Charming Shoppes' existing Milford, Ohio facility. Charming Shoppes will continue to manage credit marketing strategy for its retail brands.