Rapaport News




Advanced search
Latest Articles
Rough Markets
Polished Markets

Charming Charlie Chooses Chapter 11

Fashion-jewelry retailer plans to close underperforming stores.
Dec 14, 2017 4:20 AM   By Rapaport News
Print Print Facebook Facebook Twitter Twitter Share Share

RAPAPORT... Houston-based retailer Charming Charlie has voluntarily filed for Chapter 11 in a US bankruptcy court to enable it to restructure and reduce its debts, it said this week.

The company, which focuses on fashion jewelry, handbags, apparel, gifts and beauty products, has suffered from “adverse” macro-conditions and “certain operational shortfalls,” its chief financial officer Robert Adamek said in a court declaration Monday. Revenue has declined more than 22% and earnings before interest, taxes, depreciation and amortization (EBITDA) have slumped 75% in recent years, according to the executive’s statement.

“The general shift from brick-and-mortar retail has been further exacerbated by merchandising miscalculations, lack of inventory [and] an overly broad vendor base, all of which has led to underperformance and reduced sales,” Adamek explained.

Charming Charlie has secured commitments from lenders for $20 million in “new-money debtor-in-possession” financing, as well as a $35 million “debtor-in-possession” asset-backed loan, it said in a separate statement. The purpose of the arrangements, which are subject to court approval, is to ensure the company can continue to meet its financial obligations while it is in Chapter 11, it added.

The retailer, which operates more than 375 stores in the US and Canada, intends to close underperforming outlets and simplify its operations. Earlier this month, it launched a “back-to-basics” plan, which also mentioned an intention to close its Los Angeles office and reduce staff numbers at its corporate support center and distribution center in Houston.

Its physical stores and e-commerce platform will remain open over the holiday season, with the company confirming it plans to pay vendors in full for their goods and services provided after the filing. It is seeking court approval to continue to pay employees’ wages and benefits, as well as to honor customer programs, it added.

The decisions are “intended to help ensure that the company has adequate sources of financing and the right capital structure to support the business on an ongoing basis as we continue to implement our ‘back-to-basics’ strategy,” interim CEO Lana Krauter said. “We are confident that by reducing the size and scale of our business, we can focus on the core strengths that make the company successful.”

Image: Susan Montgomery/Shutterstock
Print Print Facebook Facebook Twitter Twitter Share Share
Tags: chapter 11, Charming Charlie, Jewelry, Rapaport News, retail
Similar Articles
Comments: (0)  Add comment Add Comment
Arrange Comments Last to First

Call Us: 1-702-893-9400
Member License Agreement   RapNet Trading Rules & Code of Conduct    Privacy Policy  
twitter twitter
About Rapaport
Advertise with us