Saks and Bon-Ton both decided to use HSBC (Household International) to finance their in-store credit cards. HSBC Watch speculated almost two years ago that Saks was a troubled merchant. “Often when a merchant aligns themselves with a predatory lender they need every dime of profit, no matter how they get it. Saks CEO Brad Martin made it into our quotable quotes with his glowing comments about Household International just before Household was sued in 48 states for predatory mortgage lending. We will watch Bon-Ton too” said HSBC Watch. Here is the press release from today:
Monday, October 31, 2005; 10:27 AM
NEW YORK — Saks Inc. said Monday it was selling its Northern department store group for $1.1 billion in cash to Bon-Ton Stores Inc., establishing Bon-Ton as a regional player in the Midwest.
York, Pa.-based Bon-Ton will add 142 former Saks department stores under the names of Carson, Pirie Scott, Bergner’s, Boston Store, Younkers and Herberger’s to its store portfolio, under the terms of the deal. Bon-Ton would also assume approximately $85 million of liabilities, including about $35 million in capitalized leases.
The deal would complete the breakup of Birmingham, Ala.-based Saks Inc., which was created by the 1998 merger of Saks Fifth Avenue with Proffitt’s Inc. The merger proved disappointing and didn’t create big cost savings, as expected, resulting in disappointing earnings.
In April, Saks Inc. announced that it was selling its Proffitt’s and McRae’s department stores to privately held retailer Belk Inc. for $622 million in cash.
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