Charming Shoppes will sell most of its Crosstown Traders titles to Orchard Brands for $35 million in cash, the company announced on Monday. The deal is expected to close in September.
That’s quite a falloff from the $218 million Charming Shoppes paid in 2005 when it bought the catalog portfolio from JPMorgan.
Orchard Brands, a Golden Gate Capital company, will receive eight apparel titles that were under the Crosstown Traders umbrella: Old Pueblo Traders, Bedford Fair, Willow Ridge, Lew Magram, Brownstone Studio, Intimate Appeal, Monterey Bay Clothing Company and Coward Shoe.
The deal did not include Figi’s Gifts in Good Taste. That will be sold separately, Charming Shoppes said.
The titles being sold will be pared with similar businesses owned by Orchard Brands: Appleseed’s, Blair, Draper’s & Damon’s, Gold Violin, Haband, Norm Thompson, Sahalie, Solutions, Tog Shop, and WinterSilks.
The deal is a tremendous fit for Orchard brands, which appears to be cornering the 50+ women’s market, according to Stuart Rose, managing director for investment bank Tully & Holland.
“The guys running Orchard Brands are very smart and capable, disciplined investors and operators,” Rose says. “They are among the leaders of the industry, and now have a whole lot more arrows in their quiver.”
Why is Charming Shoppes selling at a loss? Rose says the postage and paper increases over the past two years have cut into the profitability of all catalog companies, and may have not moved enough of its business to the Web to help its bottom line.
And the slowdown in the consumer markets didn’t help either, Rose says.
“Financing is so hard to get,” Rose says. “Especially for mid-priced companies.”
Charming Shoppes said in April that it would consider selling off its noncore catalogs to focus on its Lane Bryant, Catherines and Fashion Bug brands. It mailed its first 112-page Lane Bryant catalog USA in October, when it got back the trademark to that title from Redcats USA.
In a related development, Charming Shoppes announced today that it has agreed to sell its misses apparel catalog credit card receivables for approximately $40 million in cash to Alliance Data Systems Corporation.
Crosstown Traders was formed when JPMorgan bought the Arizona Mail Order apparel catalogs and food gifts book Figi’s from Federated Department Stores in October 2002.
Charming Shoppes announced on July 9 that Dorrit J. Bern has resigned as president/CEO and a member of the board of directors.
Brian P. Woolf, former chairman/CEO of Cache, was appointed president of the Lane Bryant brand, effective immediately, which led to speculation that the company was close to making a deal to sell the Crosstown Traders company.
The company’s chairman of the board, former chairman/CEO of Jo-Ann Stores Alan Rosskamm, has been serving as CEO on an interim basis.
Charming Shoppes on Monday also appointed Lori Twomey to the position of president, direct-to-consumer, and will be in charge of the company’s direct and e-commerce businesses.
With an estimated $1.1 billion in direct sales in 2007, Orchard Brands ranked 30th in the MCM 100. Charming Shoppes, with $408.1 million, was 57th on the list.