Charming Charlie files for bankruptcy

Houston-based Charming Charlie filed for Chapter 11 bankruptcy protection on Monday with a plan to revamp operations, reduce debt and shrink its chain of jewelry and accessories stores in a hotly competitive retail environment.

The company said in a news release that it had entered a restructuring support agreement with most of its lenders and shareholders. Through the agreement, the company aims to overhaul its capital structure and close some of its roughly 375 stores.

Company executives were not available for comment Monday evening.

“Our goal is to move through this process quickly and emerge as a stronger, more focused organization that is better positioned to succeed in the rapidly changing retail environment,” interim CEO Lana Krauter said in a statement.

Lenders agreed to provide Charming Charlie with $20 million in new financing, as well as a $35 million asset-backed loan. The company said the additional funding will let it meet its financial obligations during the bankruptcy process.

In Delaware bankruptcy court filings, the company reported $100 million to $500 million in both assets and liabilities.

The fast-growing company, founded in 2004 by Houston multimillionaire and entrepreneur Charlie Chanaratsopon, earlier this month announced a plan to reduce its store count by an unspecified number, cut jobs at its Houston headquarters and distribution center, and shutter its Los Angeles office. Chanaratsopon stepped down as CEO this fall but continues to serve as non-executive chairman of the board.

S&P Global credit analyst Samantha Stone said the specialty retail sector has grown increasingly competitive as consumers increasingly go online or shop off-price stores and other discounters. That can be particularly daunting for retailers like Charming Charlie, with sprawling footprints and declining same-store sales.

“The rapid expansion just accelerated and amplified those risks,” she said.