Photo: Michael Paulsen, co-worker
Charming Charlie, a retailer in Houston known for selling eye-catching and colorful women's accessories, quits his business after filing for bankruptcy for the second time in less than two years.
The company, which filed for Chapter 11 bankruptcy filing in Delaware on Thursday, plans to close 261 branches across the country, including nine in the Houston area. The liquidation is expected to take until 31 August and affect 3,342 full-time and part-time employees nationwide.
The retailer reported $ 81.8 million in outstanding debt and $ 6,000 in cash in its court records.
] "Debtors are again facing problems similar to those that triggered the filing of the previous cases: unsustainable operating costs, including onerous leases, and limited liquidity in our loan records," said Charming Charlie in his bankruptcy filing. "This lack of liquidity has led to a depletion of inventories, which further aggravates the debtors' lack of availability as part of their asset-backed loan, and these factors, coupled with the continued decline of the in-store retail sector, have made it increasingly difficult for debtors to do so." support their cost and capital structure. "
Charming Charlie, founded by Charles Chanaratsopon in 2004, is the latest stationary retailer to fall victim to changing consumer preferences and the advent of e-commerce, with Toys" R "Us, Payless ShoeSource and DressBarn in the The retailers closed the deal in a highly competitive retail market in recent years.
Retailers announced 7,062 closures nationwide this year, surpassing 5,864 closures reported in 2018. According to the latest report from Coresight Research Store Tracker, the retail data company predicts The closure of US stores could reach 12,000 by the end of the year.
RELATED: Francesca will close at least 30 stores this year as sales drop by 13 percent.
Meanwhile, Charming Charlie closed about 100 stores The Chapter 11 bankruptcy lasted from December 2017 b April 2018. The privately-held retailer restructured its business and debt, but these "efforts were simply not enough to stabilize debtors' business and ensure long-term viability." The company said in his application.
Charming Charlie has received US $ 13 million of debtor-in-owner financing from Second Avenue Capital and White Oak Commercial Finance to fund its operation through bankruptcy. Turnover in liquidations is expected to bring in $ 30 million.
Charming Charlie does not plan to offer a compensation to its employees, but asks for court approval to offer a one-time bonus to help close its locations.
"The Store Bonuses intend to reduce the risk of air travel by providing incentives and rewards to store employees who remain with the debtors during the store closure process," the company said in its notification.
Francesca & # 39; s, another Houston-based womenswear and accessories chain, announced earlier this year that the company is considering a "strategic financial audit" and plans to close at least 30 stores this year to increase sales increase. The publicly traded company reported a $ 10.1 million revenue loss of $ 87.1 million in its first quarter ended May 4. Sales fell 13 percent year-on-year.
Debtwire, a publication specializing in distressed debt, published a report earlier this year casting doubt on Francesca's future.
"Francescas faces a series of problems that make it difficult to complete the year without filing for bankruptcy," said Debtwire in his report. "It is unlikely that a new management can quickly reverse the situation after a series of missteps in recent years."