Charlotte Russe Bankruptcy: A Revival Plan
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Case Code: BSTR602 Case Length: 9 Pages Period: 2017 - 2019 Pub Date: 2020 Teaching Note: Available |
Price: Rs.250 Organization: Charlotte Russe Holding Inc. Industry: Textiles & Apparel Countries: United States Themes: Bankruptcy & Turnaround Management, Macroeconomic Environment |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
On February 3, 2019, San Diego-based specialty apparel retailer Charlotte Russe Holding Inc. (Charlotte Russe) filed for Chapter 11 bankruptcy protection. Charlotte Russe, which was purchased by private equity company Advent International back in 2009, continued to face an uphill battle even after the acquisition while it tried to shed its debt. The retailer was struggling with maintaining a brick-and-mortar presence, with sales steadily declining over the four years 2014-2017 due to in-store traffic slowdowns. The fall in sales was attributed to the company's business strategies, which did not resonate with young female shoppers – the company’s target audience. Its marketing strategies failed to stay ahead of fashion trends and styles, analysts said. The company was floundering as debt mounted in what had become an increasingly difficult climate for mall-based retailers. In early 2018, the company tried to restructure its debt without going into bankruptcy, but it failed. Too much debt and poor sales hurt the retailer. The company, which operated 500 stores in malls across the US, announced that it was suffering "from a dramatic decrease in sales and in-store traffic" and was struggling with “the burden of maintaining a large brick-and-mortar presence." ..
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