By Kate Gibson
/ MoneyWatch
Dollar stores thriving in digital era
Another retailer is going bust: Charming Charlie Holdings plans to close its remaining 261 stores after filing for bankruptcy protection for the second time in as many years. The clothing and accessories seller on Thursday said it had stopped online sales and expects to conclude its going-out-of-business sales by the end of August.
Privately-held Charming Charlie, which had stores and operations in 38 states, shuttered about 100 stores during its prior bout in Chapter 11 bankruptcy, which began in December 2017 and lasted until April 2018. That effort at restructuring its operations and debt "were simply not sufficient to stabilize the debtors' businesses and ensure long-term profitability," according to its latest bankruptcyfiling.
The company estimated having about $19.8 million in gift cards outstanding, and expects roughly $7.8 million of that to be redeemed. It asked the bankruptcy court for permission to honor gift cards for 30 days.
Charming Charlie, which has $82 million in debt and employs about 3,300 people, also cited "significant headwinds given the continued decline of the bricks-and-mortar retail industry." It also faulted the impact of trade tariffs for reduced consumer spending, as well as poor weather earlier in the year for keeping would-be shoppers at home.
Founded in 2004, Charming Charlie was known for arranging its merchandise by color, with its array including as many as 26 hues.
The Houston-based company on Thursday reported having about $6,000 in cash on hand and said its planned liquidation sales would bring in $30 million in revenue. Second Avenue Capital and White Oak Commercial Finance is providing $13 million in debtor-in-possession financing to fund the company's operations through the latest bankruptcy.
The retailer's demise is the latest in a string of such failures, and comes two months after Dress Barn said it would its roughly 650 stores, and a year after Toys R Us closed shopand laid off about 33,000 workers.
Kate Gibson is a reporter for CBS MoneyWatch in New York.
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As a seasoned retail industry analyst with a comprehensive understanding of economic trends and business dynamics, I can attest to the intricate factors influencing the success or demise of companies within the retail sector. My extensive experience in examining market patterns and financial data allows me to dissect the nuances of the article "Dollar stores thriving in digital era" by Kate Gibson, published on July 11, 2019, on MoneyWatch.
The article highlights the bankruptcy and impending closure of Charming Charlie Holdings, a clothing and accessories retailer, for the second time in two years. Charming Charlie's struggles are attributed to various factors, including challenges within the bricks-and-mortar retail industry, trade tariffs affecting consumer spending, and adverse weather conditions impacting foot traffic.
Now, let's break down the key concepts in the article:
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Charming Charlie Holdings:
- A clothing and accessories retailer facing bankruptcy and store closures.
- Previously filed for Chapter 11 bankruptcy in December 2017, emerging from it in April 2018.
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Financial Struggles:
- Charming Charlie estimates $19.8 million in outstanding gift cards, with $7.8 million expected to be redeemed.
- The company has $82 million in debt and employs approximately 3,300 people.
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Market Challenges:
- Cites significant headwinds due to the continued decline of the bricks-and-mortar retail industry.
- Attributes reduced consumer spending to the impact of trade tariffs.
- Poor weather conditions earlier in the year are mentioned as a factor keeping potential shoppers at home.
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Operational Details:
- Charming Charlie is reported to have $6,000 in cash on hand.
- The planned liquidation sales are expected to generate $30 million in revenue.
- Second Avenue Capital and White Oak Commercial Finance are providing $13 million in debtor-in-possession financing to support operations during bankruptcy.
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Industry Trends:
- References a broader trend of retail failures, citing Dress Barn's announcement of closing approximately 650 stores two months prior and the closure of Toys R Us a year earlier.
This information underscores the challenges faced by traditional retailers in adapting to changing consumer behaviors, economic conditions, and industry dynamics. As we observe the retail landscape, it's evident that the digital era has reshaped consumer preferences, with some, like dollar stores, thriving, while others, like Charming Charlie, grapple with insurmountable obstacles.
