Charming Charlie, a 370-store, midrange retailer that sells jewelry and other accessories, filed for Chapter 11 in Delaware bankruptcy court and announced plans to close 100 stores by the end of the year.
In his first-day filing, senior vice president and chief financial officer Robert Adamek called the 13–year-old company yet another victim of the tough retail environment. But he said its problems have been exacerbated by “merchandising miscalculations, lack of inventory, [and] an overly broad vendor base.” Its overall revenue has fallen 22 percent over the last few fiscal years, with EBITDA declining 75 percent.
The company recently embraced a “back to basics” strategy and culled both its vendors and storefront. In the meantime, its cash reserves dwindled. “Charming Charlie is out of cash to responsibly operate its business,” Adamek said.
In conjunction with this filing, Charming Charlie has entered a restructuring agreement, including $20 million in debtor-in-possession financing, as well as a $35 million debtor-in-possession, asset-backed loan. All financing agreements are subject to court approval.
Founded by Charles Chanaratsopon in 2004, who conceived it as a way to fill out Houston shopping malls he was developing, Charming Charlie grew to a $400 million business within a decade. Its core consumer is 35- to 55-years-old; it sees itself occupying the sweet spot between department stores (Macy’s, Kohl’s) and teen retailers (Claire’s). Jewelry has traditionally been its largest product category.
“Our goal is to move through this process quickly,” interim CEO Lana Krauter said in a statement. “We are confident that by reducing the size and scale of our business, we can focus on [our] core strengths.”
The company’s bankruptcy filings can be seen here.
(Image courtesy of Charming Charlie)