Photo: Michael Paulsen, staff
Charming Charlie, a Houston retailer known for selling bright and colorful women's accessories, is closing its doors after filing for the second time in less than two years.
The company, which filed for Chapter 11 protection against bankruptcy in Delaware on Thursday, plans to close 261 stores across the country, including nine in the Houston area. The liquidation is expected to last until August 31 and will affect approximately 3,342 full-time and part-time employees in the country.
In his submissions, the retailer reported approximately $ 81.8 million in outstanding debt and approximately $ 6,000 in cash.
"Debtors are again facing problems similar to those that precipitated the filing of past cases: unsustainable operating costs, including expensive leases, and limited liquidity under our loan documents," he said. Charming Charlie in his bankruptcy filing. "This lack of liquidity has led to a reduction in inventories, further exacerbating the lack of availability of debtors as part of their asset lending, which, combined with the continuing decline in the retail sector, has made difficult for debtors to support their costs and capital structure. "
Charming Charlie, founded by Charles Chanaratsopon in 2004, is the latest retailer in terms of brick and mortar to be a victim of changing consumer preferences and the rise of e-commerce. The company joins Toys "R" Us, Payless ShoeSource and DressBarn in the bankruptcy of its business in recent years in a highly competitive retail market.
Retailers announced the closing of 7,062 stores nationwide this year, surpassing the 5,864 closures reported in 2018, according to the latest Coresight Research store tracking report. The retail data firm predicts that US store closures could reach 12,000 by the end of the year.
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Charming Charlie closed approximately 100 stores during its previous Chapter 11 bankruptcy, which lasted from December 2017 to April 2018. The private retailer restructured its operations and debt. However, these "efforts were to ensure long-term profitability," said the company in its filing.
Charming Charlie has secured $ 13 million from Second Avenue Capital and White Oak Commercial Finance to finance its activities during the bankruptcy. It expects liquidation sales to generate revenues of $ 30 million.
Charming Charlie does not plan to offer severance pay to its employees, but seeks court approval to provide a one-time bonus to help close down its sites.
"Store bonuses are designed to mitigate the risk of theft by encouraging and rewarding store employees who stay with debtors throughout the store closing process," said the company in its rankings.
Francesca's, another Houston-based women's clothing and accessories chain, announced earlier this year that it was exploring a "strategic financial review" and planned to close at least 30 stores this year while she was struggling to increase sales. The publicly traded company reported a $ 10.1 million loss on a $ 87.1 million business during its first quarter ended May 4th. Sales plunged 13% from the previous year.
Debtwire, a publication specializing in distressed debt, released a report earlier this year that casts doubt on Francesca's future.
"Francesca is facing a host of problems that make it difficult to finish the year without filing for bankruptcy," Debtwire said in his report. "It does not seem likely that a new leadership can quickly reverse the situation after a series of missteps in recent years."