On Monday, Charlotte Russe announced that the Company has voluntarily filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware on February 3, 2019.
The mall-based retailer operates about 500 stores in 46 states, said it “suffered from a dramatic decrease in sales and in-store traffic” and struggled with “the burden of maintaining a large brick-and-mortar presence,” according to CNN News.
Charlotte Russe also operates the children’s brand Peek Kids. In its announcement Monday, the company said they are pursuing a sale of the business after having received a commitment of $50 million in debtor-in-possession financing. This will allow the company to keep Charlotte Russe and Peek Kids open during the court proceedings.
Advent International, a private equity firm, bought Charlotte Russe in 2009 in a $380 million deal. The apparel brand has struggled since that time as it tried to downsize its debt load. It now is joining a list of shopping mall-based retailers that have filed for bankruptcy protection, including Gymboree, Claire’s, and Mattress Firm.
On February 1, the CEO of Simon Property Group Inc., the biggest mall owner in the U.S. said he expects more private equity-backed retailers to file for bankruptcy this year.
“There are some retailers out there that we’re nervous about,” Simon Property Group CEO David Simon said Friday during a call with analysts after the company reported earnings, though he didn’t name those companies. “We are concerned about a few [retail bankruptcies] that should shake out in the first quarter.”
The company does hope to emerge from bankruptcy with a new owner and a lighter balance sheet. As part of its plan, the company is going back to its “on-trend, fast-fashion model,” marketing plan, along with developing more content for online and social media to engage core shoppers. Let’s hope it is not too late.
