Beleaguered women's retailer Christopher & Banks has interest from buyers for its online platform, as liquidation sales continue and layoffs have begun while operations wrap up at its Plymouth corporate headquarters complex.
Christopher & Banks in bankruptcy court filings on Monday said it has entered into a letter of intent with ALCC, an affiliate of Hilco Merchant Resources, which is leading its closing sales, to serve as the stalking-horse bidder for the upcoming auction and set the initial bid.
The retailer earlier this month filed for Chapter 11 bankruptcy protection, and recently notified the state Department of Employment and Economic Development (DEED) that it would permanently close the Plymouth headquarters and distribution facility and lay off 361 employees there.
"In particular, the company has experienced, and continues to experience, liquidity constraints as a result of the COVID-19 pandemic," said Keri Jones, CEO of Christopher & Banks, in a letter to DEED. "Although the company has been attempting to attract new investors and financing to maintain its business operations, the company was unable to obtain the required capital, and the company's current cash position is such that the company has insufficient funds to maintain its business operations."
Layoffs began Jan. 15 and will finish around early to mid-March, according to DEED.
The retailer is running closing sales at each of Christopher & Banks' nearly 450 stores that will ultimately result in the termination of store employees, according to its bankruptcy filings. Each of the closing sales is scheduled to be completed as soon as possible and run no later than Feb. 28 unless otherwise agreed upon. As of the petition date, Christopher & Banks had nearly 3,000 employees.
In December, investment-banking firm B. Riley Securities began marketing the sale of Christopher & Banks' online business and ultimately received indications of interest from three parties including ALCC. Currently, the purchase price will include about $8.1 million, the value of the term loan and vendor program debt, and other obligations.
Other bidders will have to go at least $650,000 over the initial bid, the court filings said. The proposed bid deadline is Feb. 17 with an auction, if required, to take place Feb. 19.
The women's apparel store has reported for months that it was in trouble. Last month, Christopher & Banks reported it lost $10.8 million, or 29 cents a share, in its third quarter ended Oct. 31.
Though Christopher & Banks has seen growth in online sales, the chain's revenue is highly dependent on in-store sales, which for the fiscal year 2019 accounted for over 75% of its net sales, according to court filings.
"The debtors are the latest victims of the retail apocalypse that was first created by a customer migration away from brick-and-mortar stores and, most recently, the COVID-19 pandemic," Jones said, in a filing in support of the bankruptcy. "The COVID-19 pandemic was the proverbial 'nail in the coffin' for the debtors following years of adverse market trends, including the shifting of sales from traditional brick-and-mortar retailers to online sellers, increased competition from big-box retailers, and changing consumer preferences."
Christopher & Banks had to suspend rental payments to landlords in November, which resulted in the retailer receiving numerous notices of default and even being locked out of its stores in Boise and Idaho Falls for nonpayment on rent. The holiday season didn't give Christopher & Banks much relief with holiday sales affected by customers' limited demand for new outfits in the absence of social engagements and customers remaining hesitant to shop in stores, the company said.
Nicole Norfleet • 612-673-4495