Charlotte Russe, the women’s fashion brand retailer, has gone back bankrupt and will close nearly 100 stores. It follows 19 other retailers that have announced they will shutter hundreds of locations among them this year. Each has been the victim of high debt loads, e-commerce competition or larger retailers that have moved into its niche.
Charlotte Russe Holdings, together with its subsidiaries, filed in U.S. Bankruptcy Court for the District of Delaware. Its management said it would close 94 stores and plans to remain in business. It is not unlike the plans of Sears Holdings, which has closed a number of Sears and Kmart locations but may keep several hundred stores open under former CEO Eddie Lampert, who will make an investment of $5 billion to do so. The bankruptcy court that handles the case has not approved his plan.
Charlotte Russe, which also owns Peek stores, has been offered $50 million in debtor-in-possession of funds. The court will need to approve management’s plans to get the money. It may be the only option the court has. Without the money, Charlotte Russe cannot pay employees and suppliers. Without these payments, the company will quickly go out of business.
The 19 other retailers that have said they will close locations this year range from giants like J.C. Penney and home improvement retailer Lowe’s to modest-sized upscale retailer Henri Bendel. Bendel has closed all of its locations and essentially will disappear. Some retailers, like Destination Maternity, will close a small percentage of their stores. It has over 1,100 locations and will close fewer than 70.
Some of the retailers that will close stores remain healthy. This is true of Lowe’s Companies Inc. (NYSE: LOW), which is profitable and had revenue of over $68 billion last year. It is closing stores to increase profit margins. Others, like Gap Inc. (NYSE: GPS), will close a much larger percentage of locations. Gap has been closing locations for three years now.
The primary culprit of the “retail apocalypse” is Amazon.com Inc. (NASDAQ: AMZN). The revenue for its North American operations was $141 billion last year and grew 33% over 2017. It has taken sales from almost every brick-and-mortar category, undoubtedly deeply harming many retailers. However, some, including Charlotte Russe, have debt loads that they cannot sustain out of modest profits.
As 24/7 Wall St. pointed out just a month ago:
In a handful of cases, store closings are the result of corporate mergers and acquisitions. In some instances, companies appear to be merely culling their most unprofitable stores while adding new ones elsewhere. However, many retailers on this list are closing locations as a result of falling revenue, largely brought on by the convenience and increasing popularity of online shopping.
Check out the 19 other retailers that will close stores this year.