(CNN/WJZ) — Charlotte Russe has filed for Chapter 11 bankruptcy and plans to close 94 stores, the company announced Monday — including six here in Maryland.
In a court filing Monday, Charlotte Russe, which operates 500 stores in malls around the country, said it “suffered from a dramatic decrease in sales and in-store traffic” and struggled with “the burden of maintaining a large brick-and-mortar presence.”
The company hopes to emerge from bankruptcy with a new owner and a lighter balance sheet. It secured $50 million from lenders to continue running about 400 Charlotte Russe and Peek Children’s stores, as well as its website, during the bankruptcy.
Poor sales and too much debt hurt the retailer.
In Maryland, stores in Annapolis, Bel Air, Ocean City, Frederick, Hagerstown and Gaithersburg will close.
In 2009, private equity firm Advent International bought Charlotte Russe in a $380 million cash-for-stock deal.
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.
Comparable store sales fell 11.7% during the third quarter of 2018, according to data from Moodys.
Fast-fashion retailers must quickly respond to the latest styles, trends, and influencers to stay ahead. But Charlotte Russe admitted it missed the mark.
The company said its marketing strategies “failed to connect” with teens and young adults and “outpace the rapidly evolving fashion trends.”
It also “shifted too far towards fashion basics” and away from trendy clothes, which the company said prevented it from growing its online business.
As part of its turnaround effort, the company, plans to save money by closing stores, go back to its “on-trend, fast-fashion model,” and develop more content for online and social media to engage core shoppers.
There’s no guarantee that Charlotte Russe will successfully emerge from bankruptcy.
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