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BOSTON-Paper Warehouse Inc., has received $15 million in line of credit financing from Wells Fargo Retail Finance, LLC that the Minneapolis-based retailer says it will use to fund some store expansions as well as for working capital and current operational support.

Paper Warehouse, which has more than 150 retail locations in the US and Canada, is looking to expand its store network.

Cheryl Newell, chief financial officer of Paper Warehouse says, “We are looking to add some locations in our existing markets.”

Founded in 1987, the company operates 152 stores, 99 company-owned stores and 53 franchise stores, which operate under the names Paper Warehouse or Party Universe. The company’s eight principal markets are: Minneapolis/St. Paul, Denver, Kansas City, MO, and KS, Oklahoma City and Tulsa, OK, Seattle, WA, Tucson, AZ, Omaha, NE, and Des Moines, IA.

Newell adds that while the company has not specified the number of new locations it plans to open, any new locations will add to its existing portfolio in its eight principal market areas. Paper Warehouse retail locations average between 8,000 to 9,000 sf in size.

Commenting on the financing deal with Wells Fargo Retail Finance, Yale T. Dolginow, president and chief executive officer of Paper Warehouse says, “We are pleased to have secured a facility such as this and to be partnering with Wells Fargo Retail Finance. We sought a credit structure that was more flexible than our previous facility and one that better matched the seasonal needs of our business. This new facility will provide us with the additional liquidity necessary to support the company’s ongoing working capital needs.”

In addition to announcing its financing deal with Wells Fargo Retail yesterday, Paper Warehouse released its second quarter financial results which report revenues of $22.1 million, down 6%from the $23.6 million posted last year. In addition, the company says it realized a net loss of approximately $263,000 or 14 cents per share, as compared to net income of $879,000 recorded a year ago. For the first six months of its fiscal 2001, Paper Warehouse posted flat revenue growth and a net loss of $689,000.

“The economy continues to hurt specialty retailers such as Paper Warehouse, and as a result, our second quarter sales performance was disappointing,” Dolginow notes. “However, we have taken a variety of steps to strengthen the potential of third and fourth quarter’s results.”

Wells Fargo Finance LLC Senior Managing Director and Chief Operating Officer Andrew H. Moser comments that the working capital it is providing to Paper Warehouse “will help them become an even more important player in the industry.”

He notes, “Paper Warehouse continues to demonstrate its own point of differentiation from other competitors within the niche party and paper business, despite the economic downturn.”

Wells Fargo Retail Finance LLC, which is based in Boston, also has offices in Philadelphia and Los Angeles. The company, a subsidiary of Wells Fargo and Company, has more than $1.9 billion in loan commitments to retailers throughout North America.

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