Christopher & Banks Files For Bankruptcy, Could Close All Stores

By Ben Unglesbee of Retail Dive

Summary:

• Christopher & Banks filed for Chapter 11 bankruptcy Thursday after protracted demand declines among its customer base in 2020 and defaults on major financial obligations earlier this month.

• The women’s apparel seller said in a press release that it plans to close “a significant portion, if not all, of its brick-and-mortar stores.” It has hired Hilco Merchant Resources to run liquidation sales at all 449 stores, according to court documents. 

• While it prepares to exit brick-and-mortar, Christopher & Banks plans to sell its e-commerce unit in Chapter 11. The company is in “active discussion with potential buyers,” it said in the release. 

With store sales making up 75% of Christopher & Banks’ sales, the COVID-19 pandemic was a fatal blow to the apparel seller’s business. CEO Keri Jones said in court papers that its Chapter 11 filing was “primarily the result” of the pandemic’s impact. 

The public health crisis roiled Christopher & Banks’ business throughout the year. After closing its stores temporarily in the spring, it lost its primary revenue channel. Even after furloughing staff, cutting executive pay, skipping rent and receiving a $10 million loan from the federal stimulus package, its liquidity remained constrained and its finances stressed. 

Amid a prolonged COVID-19 surge in the fall, the company’s sales were down 22.6% in the third quarter, after which Christopher & Banks disclosed it had hired advisers to evaluate its financial and strategic options, including a sale and bankruptcy. Sales during the holiday season didn’t improve. Jones said that “customers have limited demand for new outfits in the absence of social engagements and customers remain hesitant to shop in stores.”

Starting in November, the company stopped paying rent again, according to Jones. That has brought in threats of eviction from landlords, another factor in the retailer’s decision to file. Since then, the company has also defaulted on the lease to its headquarters, as well as key loans that keep it afloat. 

Prior to that, the company brought on advisers from investment bank B. Riley and reached out to some 180 parties as it sought potential providers of capital or buyers. But, ultimately, nobody wanted to buy Christopher & Banks’ physical footprint in whole or in part.

With its advisers, Christopher & Banks concluded that a sale of its brick-and-mortar business “is not viable or achievable under the current circumstances,” Jones said in her filing. Barring some last-minute savior, the company is on track to wind down its store operations. On the other hand, Jones added that the company’s e-commerce business “has and continues to represent an attractive asset for buyers.” 

Founded in 1956, the apparel seller was originally named “Braun’s Fashions,” a family business until it went public in 1992. Today it specializes in value-priced women’s apparel including “casual clothing, everyday basics, wear-to-work, leisure/activewear and seasonal sleepwear,” Jones said in her filing. With its 449 stores, it targets smaller markets, typically fewer than 75,000 people. 

Jones told analysts last year that the retailer had shown positive sales trends until the pandemic hit, making it one of the true victims of a pandemic that was blamed for nearly all retail bankruptcies last year, including by executives at companies that had been in financial distress for years prior. 

Should it close its stores, Christopher & Banks will join a growing cohort of retail and apparel brands to shutter their physical operations and enter an afterlife as an e-commerce specialist.