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Charlotte Russe makes moves to avoid bankruptcy in 2018

By Sara Ehlers

Dec 28, 2017

San Francisco-based retailer Charlotte Russe is ending the year with a struggle. The future of the company, which has been working to restructure its debt without going into bankruptcy, currently hangs in the balance due to the mercy of shopping mall owners.

In order to stay afloat without filing for Chapter 11 bankruptcy, Charlotte Russe will have to convince these owners to allow some lenience for their store rents. Its term-loan debt was recently reduced from 214 million dollars to 90 million dollars, as reported by Apparel News. The annual interest rate on the loan was also reduced by approximately 50 percent. The company's plan to receive a break on its store rents is one way that Charlotte Russe can avoid bankruptcy.

However, it seems that this move may not even be enough to save the business from its financial issues completely. “You have to sell [customers] full-price merchandise to be viable," Davidowitz & Associates, a New York retail industry consulting and investment banking firm, told Apparel News. "You have to reinvent yourself, and no one else has been able to do that. They have taken steps to move forward, but the record says this is a very tough road.”

Currently, Charlotte Russe operates just over 500 stores in the U.S. and including Puerto Rico. Founded in 1975, the privately held company specializes in junior's retail and fast-fashion apparel. If the company sticks to its new restructuring plan, the womenswear brand may be able to salvage its brand for the upcoming year.