Plymouth-based Christopher & Banks has filed for Chapter 11 bankruptcy protection and begun liquidation sales as it prepares to close all of its brick-and-mortar stores.
Plymouth-based Christopher & Banks files for bankruptcy protection
The women's apparel chain begins closing stores as sales plummeted during pandemic.
January 15, 2021 at 1:13AM
Effects from the pandemic, the retailer said Thursday, stalled progress on its turnaround plan and sales were not enough to keep stores open.
The women's apparel chain, which filed voluntary petitions in the U.S. Bankruptcy Court for the District of New Jersey, said it also is in active discussions with potential buyers for the purchase of its online platform and other assets.
"Since the start of the COVID pandemic, we have taken aggressive steps to protect our business while continuing to serve our customers in a healthy and safe environment," said Keri Jones, CEO of Christopher & Banks, in a statement.
The chain had been in financial trouble before the pandemic and brought in a new leadership team to jump-start its sales.
But restrictions because of the virus and people's reluctance to shop in person hastened issues such as declining mall traffic that already had damaged Christopher & Banks and several other retailers such as J.C. Penney, Lord & Taylor, Neiman Marcus, Brooks Brothers and J. Crew, which also have filed for bankruptcy.
Plus, the pandemic added new challenges for apparel sellers as more people worked from home adopting more casual styles and not buying as many clothes.
"Despite the tremendous advancements we have made in executing our strategic plan, due to the financial distress resulting from the pandemic and its ongoing impact, we elected to initiate this process and pursue a potential sale of the business in whole or in part to position the company for the future," Jones said. "I want to extend my deepest gratitude to our dedicated associates, loyal customers and supportive partners for their commitment to Christopher & Banks throughout these challenging times."
Christopher & Banks, which started as Braun's Fashions in 1956, operates about 450 stores in 44 states. The closing process has begun at its hundreds of locations across the country, including 30 stores in Minnesota, according to Hilco Merchant Resources, which is leading its closing sales. Merchandise is currently on sale in stores at 40 to 60% off original prices. Store fixtures are also being sold.
The women's apparel store has reported for months that it was in financial trouble. In December, Christopher & Banks reported it lost $10.8 million, or 29 cents a share, in its third quarter ended Oct. 31. Sales decreased nearly 23% to $72.8 million in the quarter compared with the same time last year.
The company began working with external advisers, including investment-banking firm B. Riley Securities Inc., to consider different options including selling the company or seeking bankruptcy protection.
Before the pandemic, the retailer was on the rebound after a continued decline. In late 2019, with Jones, a former Target executive, at the helm, Christopher & Banks posted its first quarterly profit in three years after it made several changes including restructured its real estate leases, expanded its omnichannel capabilities and worked on improving the customer shopping experience.
In fourth-quarter results released in March, the company reported sales increases.
However, a few days later Christopher & Banks, like many retailers, was forced to temporarily close many of its stores due to the pandemic. With the closings, the store later reported a dismal first quarter with net sales falling nearly 52%, and the company having to dip into its cash and credit reserves. Christopher & Banks' available cash and cash equivalents fell to just $200,000 for the quarter with $16.8 million in outstanding borrowing.
Toopan Bagchi, a senior adviser for Edina-based retail consultancy the Navio Group, said Christopher & Banks likely struggled to find a clear position during the pandemic as a midpriced retailer that sells a mix of clothing that falls in the middle of professional and casual wear and caters to a middle-age to older demographic.
"It's sort of in the middle, and the middle is in a weird place," he said.
Retailers, even those appealing to an older demographic, still need to be innovative in figuring out what their customer needs, what is the best way to connect with their customers and who their next customers will be, Bagchi said.
"How do you start to really get out of those ruts?" Bagchi said. "It's not unique to Christopher & Banks. It's the same story at Macy's. It's the same story at J.C. Penney. It's the same story at so many of these places. … You walk in even a Gap flagship brand, you go in there and you are like, 'This looks pretty much the same as it did in the '90s.' "
Nicole Norfleet • 612-673-4495
Twitter: @nicolenorfleet
Here are some tips to keep your deliveries safe during the last few days of the holiday rush.
