IDA charms expansion-minded catalog retailer

IDA charms expansion-minded catalog retailer

Philippidis, Alex

A Pennsylvania-based retail giant says its plan to take over Lane Bryant’s online and catalog business in 2007 is driving an expansion scenario that could unfold in Westchester next year.

Charming Shoppes Inc. is searching in Rye Brook for 60,000 square feet of space it will need to accommodate its current staff of 97 employees now based at regional offices in Greenwich, Conn., plus another 50 who would work on the new Lane Bryant catalog.

The company says it is weighing sites in the Connecticut cities of Stamford and Norwalk as well. A decision is planned early next year, said Anthony F. Ceretti, manager of strategic relocation and expansion services for KPMG L.L.P., which is representing Charming Shoppes in its office search.

While Ceretti would not disclose specific sites, brokers not connected to the search said Charming Shoppes was considering Reckson Executive Park, where 110,918 square feet is available immediately and MCI’s 180,000 square feet is being marketed as available in July, according to MrOfficeSpace.com. MCI has not made a decision to renew or vacate that space.

Earlier this month Charming Shoppes won a promise of economic development assistance from the Westchester County Industrial Development Agency. Charming Shoppes is seeking exemptions from state and county sales taxes on construction materials and new equipment valued at $160,000.

“They came to us a couple of months back. We’re very happy to assist them in coming in here from their Connecticut location and in realizing their future plans in Westchester,” said Salvatore J. Carrera, the county’s director of economic development/ real estate.

Chaining Shoppes told the IDA its relocation would cost about $4.7 million, and that the average salary of employees would be $62,000.

PLUS-SIZED SPECIALTY

Headquartered in Bensalem, Pa., Charming Shoppes is the publicly traded, $2.3 billion a year owner of three retail chains specializing in womens’ plus-sized apparel: Lane Bryant, Fashion Bug and Catherine’s Plus Sizes. In Westchester, Lane Bryant operates stores at the mall Galleria at White Plains, Cortlandt Town Center and Cross County Shopping Center in Yonkers, while the closest Fashion Bug to Westchester is in Norwalk.

Though Charming Shoppes owns Lane Bryant, the rights to the chain’s catalog and e-commerce sales belong to Redcats USA L.P. – a $1.3 billion a year unit of French-owned PPR, Europe’s biggest retailer not specializing in food – under an agreement that expires in October 2007.

When that happens, Charming Shoppes will take over publishing the catalog, which the company projects will generate annual revenues of $300 million. That’s more than double the $143 million in “direct to consumer” sales Charming Shoppes recorded from June, when it entered the catalog retail business, through Oct. 29.

Direct-to-consumer accounted for 14 percent of Charming Shoppes’ $663 million in total net sales. Lane Bryant year-toyear sales rose 8 percent to $247 million during the third quarter, and rose 6 percent to $757 million over the first nine months of 2005.

LOOKING ONLINE

Charming Shoppes’ interest in expanding its online and catalog business reflects similar interest by retailers worldwide after catalog-only companies found early success online since they already had the order-fulfillment systems in place, an industry observer says.

“The retailers are realizing, Omigosh there’s a whole large channel. We’ve goi to get on board with it. And some companies, like Charming Shoppes, realize, ‘Hey rather than me start from scratch, why don’t I buy someone that’s already doing it well,” said Sherry Chiger, editorial director of Multichannel Merchant, an industry publication based in Stamford.

Chiger said it was unusual for a retailer not to have control over its own catalog and e-commerce business – a consequence of Lane Bryant’s divorce from Limited Brands Inc. a few years back.

According to the Direct Marketing Association’s Multichannel Marketing 2005 Report, released in October, the percentage of Internet sales vis-a-vis total sales is projected to increase from the 39 percent recorded last year to 43 percent in 2007 and to 46 percent by 2009.

Charming Shoppes’ plans for Lane Bryant became apparent after it acquired Crosstown Traders Inc. for $218 million last spring from JPMorgan Partners, the private equity arm of J.P. Morgan Chase & Co.

Crosstown Trader is a $460 million a year publisher of 11 catalog titles specializing in women’s apparel, footwear and specialty gifts. The deal allowed Charming Shoppes to expand its 29 million name database with Crosstown’s customer base of 4 million – as well as project annual sales this year exceeding $2.7 billion.

Charming Shoppes would be the second major catalog retailer to base major operations in Westchester. Lillian Vernon Corp. maintains headquarters in White Plains and was founded by its eponymous owner from the kitchen of her Mount Vernon home in 1951.

Copyright Westfair Communications Dec 12, 2005

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