Photo: Michael Paulsen, staff
Charming Charlie, a Houston dealer who is known for selling spotted and colorful female accessories, goes bankrupt after he filed for bankruptcy for the second time in less than two years.
The company, which filed for Chapter 11 bankruptcy protection in Delaware on Thursday, plans to close 261 businesses nationwide, including nine in the Houston area. Liquidation is expected to take place until 31 August and will affect approximately 3,342 full-time and part-time employees nationwide.
The dealer in its court applications reported an outstanding debt of approximately $ 81.8 million and cash on hand at about $ 6,000.  "The Debtors again encounter issues similar to those that fell into the previous cases: unsustainable operating costs, including cumbersome leases and limited liquidity according to our loan documents," Charlie told in his bankruptcy application. "This lack of liquidity has resulted in a reduced inventory, which further exacerbates Debtor's lack of availability during its asset-based loans. These factors, combined with the continued decline in the clothing industry, have made it increasingly difficult for debtors to support their cost and capital structure."
Charming Charlie, founded by Charles Chanaratsopon in 2004, is the latest brick-and-mortar reseller who becomes the victim of changing consumer preferences and the rise of e-commerce. The company connects to toys "R" Us, Payless ShoeSource and DressBarn in business operations in recent years among a fiercely competitive retail.
Dealers announced 7,062 stores closures nationally so far this year, exceeding the 5,864 closures reported in 2018, according to the latest Coresight Research Store Tracker report. Data for retailers for the data exchanges for US stores close 12,000 at the end of the year.
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Charming Charlie closed about 100 stores under Its previous chapter 11 bankruptcy, which lasted from December 2017 to April 2018. The privately owned retailer restructured its operations and debt, but those "efforts were simply not sufficient to stabilize Debtor's business and ensure long-term profitability"
Charming Charlie has received a $ 13 million debt from Second Avenue Capital and White Oak Commercial Finance to fund its through the bankruptcy. It expects liquidation sales to generate $ 30 million in revenue.
Charming Charlie does not plan to offer resignation to its employees, but seeks court approval to offer a one-time bonus to help close their premises.
"Big Bonuses aim to mitigate aviation risk by stimulating and rewarding business employees to stay with Debtors through the Store Closing process," the company said at the time of submission.
Francesca, another Houston-based women's clothing and accessory chain, announced earlier this year It is exploring a "strategic financial review" and plans to close at least 30 stores this year as it is struggling to increase sales. The listed company reported a loss of $ 10.1 million on sales of $ 87.1 million in the first quarter of May 4. Sales fell 13 percent the year before.
Debtwire, a publication specializing in distressed debts, issued a report earlier this year that Francesca faces a host of problems making it difficult to complete the year without filing bankruptcy, Debtwire says in its report. "It does not seem likely that the new management can quickly reverse the situation after a series of mistakes in recent years."