Charming Charlie, a popular accessories retailer with 375 locations throughout North America, is planning to shutter six of its 15 Illinois stores after receiving approval to do so as part of a bankruptcy restructuring plan from the court. It did not disclose when it would close these locations, only that they would be part of a larger closing plan that will eliminate 75 of the company’s existing locations. These locations will remain open through the holiday season, a critical time of year for retailers.
According to court documents, Charming Charlie has between $50 million and $100 million in assets and between $100 million and $500 million in liabilities. By filing for Chapter 11 bankruptcy, the fashion-forward accessories retailer hopes to reposition itself to become profitable again, rather than having to shut down entirely.
Going Back to Basics With a Restructuring
Charming Charlie announced numerous steps it plans to take as part of its “back to basics” restructuring plan. One of these is to close its Los Angeles headquarters and reduce the total size of its corporate workforce. The company is based in Houston, Texas and plans to move remaining Los Angeles employees to its main headquarters. Another planned recovery step is to secure a $20 million bankruptcy term loan and a $35 million asset-backed loan, but these are subject to court approval. One of its goals is to keep most of its existing locations in operation. Right now, what the company claims it needs most is a sustainable capital structure.
According to statements released to the media, Charming Charlie’s goal is to stabilize its operations by reducing its size. This should enable it to anticipate trends and serve its customer base better. Charming Charlie’s target demographic is teenage girls and adult women, primarily young adult women, seeking moderately priced accessories. The majority of Charming Charlie’s merchandise is priced between $5 and $50, positioning it between bargain options like Claires and more expensive retailers like Macy’s. In stores, the merchandise is organized according to its color, and pieces ranging from vintage-inspired to modern, chic, and bohemian in style.
It Has Been a Hard Decade for Brick and Mortar Retailers
Charming Charlie was hit by many of the same issues that plagued retailers like Aeropostale, Pac Sun, and American Apparel. Foot traffic in malls is down and online spending is up. For retailers like Charming Charlie, this often means focusing on ecommerce over brick and mortar sales now and in the coming years.
Work with an Experienced Chicago Bankruptcy Lawyer
Learn more about the bankruptcy process by speaking with one of the experienced bankruptcy attorneys on our team at Newland & Newland, LLP. We can explain the different chapters to you and help you determine which is best for your situation and even if bankruptcy is the right way to go. Contact our office today to schedule your initial consultation with us. We serve clients in the Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca areas.
(image courtesy of Alina Grubnyak)