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Charming Charlie To Close All 261 Stores
The accessories retailer has filed for Chapter 11 bankruptcy again and expects to shutter all stores by August 31.
Wilmington, Del.—Accessories store Charming Charlie filed for Chapter 11 bankruptcy Thursday, with plans to close all of its 261 locations by August 31.
The Houston-based retailer claimed $81.8 million in debt with $6,000 in cash on hand, as per a court filing.
Known for organizing its sections by color, the stores sell fashion jewelry, handbags, clothing and giftware.
Court documents show the company employs 3,342 people, including 856 full-time and 2,486 part-time workers.
Chief Financial Officer Alvaro Bellon pointed to “unsustainable” operating expenses, including “onerous leases” and constrained liquidity under its existing loans, as the issues hindering long-term sustainability in a preliminary statement in court filings.
The retailer leased all of its stores with aggregate occupancy costs totaling $47.4 million in 2018, as per court filings.
Bellon explained that to boost its credit line, the company had to buy more lower-quality inventory because its borrowing base expanded alongside its inventory level.
However, the inventory wasn’t up to the standards customers had come to expect, said Bellon, so it sat on shelves, leading to markdowns and lower margins.
Bellon said all these factors, combined with the “continued decline” of the brick-and-mortar retail industry, made operating the business difficult.
This is the Houston-based retailer’s second bankruptcy filing in less than two years, previously filing in December 2017.
The reorganization plan at the time included closing about 100 stores and its Los Angeles office as well as reducing the headcount in its support center and distribution center in Houston.
The retailer emerged in April 2018 with new owners, naming Boston-based private equity firm THL Credit as its majority equity holder.
The company is partnering with creditors, including Second Avenue Capital and White Oak Commercial Finance, taking out a loan for $13 million to assist with operations until the stores close.
The going-out-of-business sales, facilitated by Merchant Resources and SB360 Capital Partners, have already started and are expected to raise $30 million.
Orders can no longer be placed on the website.
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