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Charlotte Russe to Liquidate and Close All Stores

Charlotte Russe is closing up shop as part of a company-wide liquidation, although the company name could be sold as part of an intellectual property asset sale.

A Delaware bankruptcy court on Wednesday approved the liquidation of the women’s specialty retailer. The liquidation firm handling the going-out-of-business sales is SB360 Capital Partners, an affiliate of the Schottenstein family, which also owns American Eagle Outfitters and DSW.

Charlotte Russe has been troubled for some time. In June 2017, credit ratings firm Moody’s Investors Service had the chain on its list of companies with a “negative” outlook that could be part of a distressed retailer list over the next year or so. The distressed retailer list looks at companies that could have a greater chance of default.

The chain filed a voluntary Chapter 11 petition last month, and had initially planned to wind-down just 94 stores. With the liquidation, it will now shutter its remaining 418 locations. Located mostly in malls and outlet centers across the U.S. and in Puerto Rico, the retailer operates under the Charlotte Russe and Peek Kids nameplates. In its bankruptcy filing, court documents noted that net sales grew to $984 million in 2014, but fell to as low as $795.5 million in 2018. An out-of-court restructuring was completed in February 2018 to help de-lever the balance sheet, but the chain couldn’t stop the decline in sales.

The company’s online site has already been shut down.

In operation for more than 40 years, the retailer has been hit by the change in consumer shopping habits as many moved away from the mall to online. It operates in the juniors category of the women’s apparel sector. Charlotte Russe had been acquired in 2009 by private equity firm Advent International through a $380 million tender offer.

The retailer joins Gymboree and Payless ShoeSource as retailers who have said this year that they are shutting down all operations.