On Monday, clothing store Charlotte Russe announced that the popular retail chain (found in everyone’s mall) has filed for Chapter 11 bankruptcy and plans to close 94 stores.
Charlotte Russe is a fashion brand for young women, operating in 48 states and U.S. territory Puerto Rico, through their online stores and mobile apps. In 2016, the company expanded to include Peek Kids, which operates 10 stores and an e-commerce site. Those were sunnier days.
This week the store has filed several motions with the U.S. Bankruptcy Court to get approval to run the business as usual during the Chapter 11 proceedings. One of the things the company needs authorization from the court to do is continue to honor certain customer programs that they offer. CNN reports that Charlotte Russe as a business has “suffered from a dramatic decrease in sales and in-store traffic” and struggled with “the burden of maintaining a large brick and mortar presence.” Poor sales and debt also led to the retail chain’s need to close 94 of its stores. The company hopes to emerge from bankruptcy with a new owner and a lighter balance sheet.
Last year, Charlotte Russe reached a deal to reduce its debt from $214 million to $90 million. Despite the deal, Charlotte Russe’s sales plunged from $928 million in 2017 to $795 million last year. They are not alone. Comparable store sales fell 11.7% during the third quarter of 2018, according to data from Moodys. Other stores that have filed for bankruptcy include Gymboree and Claire’s.
One the biggest issues they encountered over the last few years was creating marketing strategies that connected with teens and young adults. Failure to do so set the store up to be outpaced in the rapidly evolving fashion trends. Luckily, the retail chain has successfully secured $50 million from lenders to keep 400 Charlotte Russe, Peak Children’s stores and their websites during the bankruptcy.
If Charlotte Russe was able to rebrand itself into a trendier store, what types of clothing items would you like them to have?