(Reuters) - Fashion jewelry and accessories chain Charming Charlie LLC is preparing to file for bankruptcy as early as this month, people familiar with the matter said on Friday, the latest example of a U.S. retailer struggling during the key holiday shopping season.
The Houston-based retailer, known for its color-coordinated stores and affordable merchandise, has started to shutter about 100 of its approximately 360 stores, and plans to close more in bankruptcy, the sources said. Its flagship location on New York City’s Fifth Avenue will also close, the people added.
As an attempt to avert bankruptcy proceedings, one of the sources said Charming Charlie is continuing negotiations with its creditors in the hope of reaching a debt restructuring settlement.
The company’s $150 million term loan was trading significantly below face value at between 35 and 40 cents on the dollar this week, according to Thomson Reuters data, indicating investor concerns about repayment in full. Twelve months ago, the loan was quoted at 64 cents on the dollar.
“We recently commenced a number of measures to stabilize our business in support of a new back-to-basics strategy,” a Charming Charlie spokesman said in a prepared statement. “We are working closely with our outside advisors to explore a range of alternatives to help ensure the company has adequate sources of financing and the right capital structure to support the business on an ongoing basis.”
The company spokesman declined to comment on the bankruptcy filing or its timing.
Charming Charlie is also closing its international operations and Los Angeles office, and is cutting headcount in a Houston support center and distribution center, the spokesman said.
The retailer has about a dozen stores abroad, including in the United Arab Emirates, Oman and the Philippines, according to its website.
The company is working with turnaround advisor AlixPartners LLP, in addition to other restructuring advisors and attorneys, the sources said.
AlixPartners did not immediately return a request for comment. The sources asked not to be identified because they were not authorized to speak to the media. Trade publication Debtwire reported last month that Charming Charlie was preparing for a potential bankruptcy filing, without providing details on when the filing could come.
Struggling retailers traditionally attempt to hold out and not file for bankruptcy immediately before the important holiday selling season, hoping for a boost in sales that will give them a lifeline.
Charming Charlie, however, is poised to join peers including California-based shoeseller Shiekh Shoes LLC and teen retailer Styles For Less Inc that have both filed for bankruptcy in recent weeks.
More than 15 retailers, including Toys “R” Us Inc, the largest toy seller in the U.S., have filed for bankruptcy this year.
Reuters reported late last year that Charming Charlie was interviewing for investment banks to help it address its debt burden.
Charming Charlie was founded in 2004 by entrepreneur Charlie Chanaratsopon, and its early success put Chanaratsopon, chief executive officer and majority owner of the company, on the Forbes America’s Richest Entrepreneurs Under 40 list. The magazine pegged his net worth at $450 million.
Reporting by Jessica DiNapoli in New York; editing by Diane Craft
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