CardWorks Will Service Spiegel Private-Label CardsCardWorks LP said Friday that will take over servicing $2 billion in credit card receivables of bankrupt retailer Spiegel Group Inc. CardWork's Cardholder Management Service division will take over the tracking and collection of 4 million Spiegel store credit card accounts effective June 30. Spiegel, Downers Grove, IL, filed for bankruptcy in March as a result of huge losses from its credit card business, which had targeted subprime customers who ended up defaulting because of the weak economy. Earlier this month, Spiegel entered into an agreement with Alliance Data Systems Corp. for Alliance to issue private-label credit cards for Spiegel.
In other developments, the Chicago Sun-Times reported that Spiegel Inc. lost $679 million during the 2002 fiscal year, "16 percent more red ink" than in 2001. Also, the loss in the first quarter of this fiscal year tripled the amount from last year to $131 million from $43.3 million. The newspaper also said the company filed two financial reports Thursday -- one for fiscal year 2002 and the other for the first quarter of fiscal 2003, and that it received approval from the bankruptcy court to file the reports "without the blessing of its auditor."
KPMG LLP reportedly wants to review a report by an independent examiner appointed by the U.S. District Court in Chicago before it signs off on its books, according to the newspaper, which stated that the examiner's report is due in July. As a result, the troubled giant warned the numbers may need to be adjusted. Also, net sales fell to $414 million in the first quarter of 2003 from $537 million in the year-ago period. For fiscal 2002, sales totaled $2.05 billion compared to $2.97 billion in 2001.