Charming Shoppes, Inc. to acquire Catherines Stores Corp. for 0.48 times revenue

Weekly Corporate Growth Report, Nov 22, 1999

The Deal: Charming Shoppes, Inc. has entered into a definitive merger agreement to purchase Catherines Stores Corp. According to the agreement, Charming Shoppes will make a cash tender offer for all the outstanding shares of Catherines Stores common stock at $21.00 per share.

Discussion: Catherines Stores, the retailer of large-size women's clothing and accessories, operates more than 430 stores in 40 states. Its Catherine's and PS...Plus Sizes, Plus Savings chains offer casual apparel at low to moderate prices. The company's Added Dimensions and The Answer chains offer career apparel at moderate to high prices. All of Catherines Stores' shops carry sizes 14 and up, and the Catherine's and PS chains carry sizes larger than 26. Catherines Stores gets about 65% of its sales from namebrand merchandise. Catherines Stores private labels include CST Studio, Maggie Barnes, Kathy White, Liz & Me, and AD Sport.

Charming Shoppes brings last year's fashions to Mainstreet America. The company operates over 1,100 Fashion Bug and Fashion Bug Plus stores in more than 40 states. Serving low- to middle-income women and teens who follow fashion styles rather than set them, the chain's stores offer basic styles of moderately priced apparel and accessories. Private labels account for over 75% of sales. Most stores are in strip malls in the northeastern United States. Charming Shoppes also runs the Modern Woman plus-size chain which has over 135 stores in 25 states.