Dive Brief:
- The Charming Charlie brand opened a store in Atlanta last Friday, its first since the brand liquidated in bankruptcylast year.
- After a planned physical store revival was delayed by the COVID-19 crisis, Charming Charlie plans to roll out more locations in late 2020 and early 2021, the company said in a press release.
- The next store is set to open this Friday in Towson, Maryland, according to the company. On its website, Charming Charlie says it plans to open as many as 25 stores a year.
Dive Insight:
Charming Charlie just won't quit. Since its founding in 2004, by Charles Chanaratsopon,the retailer has been through two bankruptcies. The first bankruptcy left it with a smaller footprintby more than 100 stores and turned over ownership to the company's lenders. The second bankruptcy led to the full liquidation of the retailer's brick-and-mortar business.
Chanaratsopon regained control of the brand when a real estate firm he reportedly controlled bought up Charming Charlie's intellectual property in bankruptcy last year for more than $1 million. He told the Houston Chronicle a year ago that he planned to revive the retailer.
Under Chanaratsopon, Charming Charlie built a brand and following in part on its color-coded approach to merchandising. At its largest, the company's footprint reached nearly 400 stores, but that started to shrink even before its first Chapter 11 filing in late 2017.
The arrangement of products by color might have added some charm to stores, but it also complicated the retailer's inventory management. As Charming Charlie's then-CFO would detail in court filings in its second bankruptcy in 2019, stores would often be left with unsold color-based merchandise, forcing it to discount it.
Those hits to profits, along with expensive leases, unfavorable trade terms with suppliers, Trump Administration tariffs, severe weather events and other factors led to the ultimate decision to file again and liquidate.
The retailer is not alone in finding a life after a bankruptcy wind down. Another apparel retailer that liquidated last year, Charlotte Russe, rapidly began rebuilding its physical footprint the same year after its IP was sold off.
After Toys R Us bought and then closed down FAO Schwarz, whose New York City flagship was made famous by the Tom Hanks movie "Big," it returned to New Yorkin late 2018 under new ownership.Toys R Us itself liquidated entirely in bankruptcy in 2018. Last year, it returned to brick-and-mortar with two new stores under a joint venture between the owners of the toy retailer's IP and b8ta.
The value of retail brands can persist, if given the chance. That is much of the concept behind the business models of Authentic Brands Group, which has been a prolific purchaser of bankrupt retailers'IP, as well as Bluestem Brands, Marquee Brands and others.
The physical rebirth of a liquidated retailer is also a reminder that retail companies fail for all sorts of reasons, many of them financial and specific to circ*mstances — who owns them, who lends to them, who rents to them and so on. The death of a retailer does not necessarily mean it has no loyal customers left.
Filed Under: Financial News
