Charlotte Russe posted a notice on their website that they’re “Going out of business” and “all stores” are closing.
It seems that the fashion store that once sponsored a line of clothing by stylist Eric Daman, known for his work on Gossip Girl as reported by Glamour, couldn’t keep its doors open.
According to a report by USA Today, news that the fashion retailer was struggling came a few years ago when the company announced that it had worked a deal to handle their current debts.
Whatever arrangement they had made didn’t seem to work because on February 4, the San Diego-based company filed for Chapter 11 bankruptcy protection.
According to the US Courts website, Chapter 11 means the company is seeking to reorganize by either partnering with another company or seeking a sale or merger. Upon reorganization, they then propose a new plan or deal to pay off existing debts.
For many companies, it’s a last ditch effort to prevent themselves from going out of business as it can buy them time to get their affairs in order. Often a merger or sale can bring in new business leaders or an influx of cash needed to get the company back on track.
Twinkie maker Hostess is an example of how this can work to keep a company afloat during hard times.
Unfortunately for the line of chain mall stores, it didn’t work. The intention was for the owners of Charlotte Russe to find a buyer before February 17 to take on the company and its debts in order to remain open, hence the filing for Chapter 11.
It seems the company was unable to find a buyer, which left only one option – sell off all remaining merchandise and close the doors forever.
According to Brian Cashman, chief restructuring officer, the company failed to tap into online shopping and connect with its customers digitally.
“…shifted too far towards fashion basic, did not effectively reposition their e-commerce business and social media engagement strategy for success and growth, and failed to rationalize expenses related to store operations to better balance brick-and-mortar operations with necessary e-commerce investments.”
There’s no word on what will happen to the kid’s clothing store Peek that is controlled by Charlotte Russe.
The world of fashion business is cutthroat with lots of competitors vying for customer dollars. Charlotte Russe’s inability or unwillingness to move online is likely what caused their downfall as the majority of their target demographic, teens and young women in their 20s, are forgoing mall shopping for online shopping.
While the online store has officially closed down forever, fans of Charlotte Russe still have a chance to go to their local store and buy whatever stock remains, perhaps at discounted liquidation prices.