Charming Shoppes Inc. said Thursday that it has agreed to sell its private-label credit card program to Alliance Data Systems Corp. of Dallas for about $140 million.
The sale would reduce the Bensalem, Pa., retailer's debt and allow it to focus more on its core operations.
Alliance Data, which operates loyalty programs and private-label card programs, would service Charming Shoppes' private-label credit card receivables program for 10 years. Charming Shoppes has roughly 4.5 million active accounts.
Charming Shoppes said it would use about $30 million of the gross proceeds from the sale to fund the termination of contractual obligations related to the deal and for exit costs, and the remaining $110 million would go toward reducing its net debt. The companies said they expect the deal to close by yearend.
Eric Specter, Charming Shoppes' chief financial officer, said the retailer would also receive annual payments from Alliance Data based on credit sales generated.
Alliance Data's president and chief executive, Ed Heffernan, said his company's core private-label business' sales continue to grow and that the deal with Charming Shoppes would "more than double that growth rate to over 20%."