Charming Charlie recently announced its “back to basics” strategy in efforts to get business under control in an uncertain accessories market. A key initiative is plans to close a number of underperforming stores in the United States, close its Los Angeles office and reduce headcount in its Houston Corporate Support Center and Distribution Center. These changes will allow Charming Charlie to simplify its business operations, improve liquidity, and focus efforts on its core strengths.
“By reducing the size and scale of our operations, we have the opportunity to stabilize the business. We also will be better equipped to read and react to trends and what our customers want, which had been the hallmark of our success. It’s what we are referring to as our Back-to-Basics Strategy,” said Lana Krauter, who recently was named Interim Chief Executive Officer of Charming Charlie. “This was a challenging decision to make, but we know that it is in the best interest of Charming Charlie, our customers, our vendors, and our employees moving forward.”
A strategy to merchandise by color has distinguished the store from other department and specialty stores, resulting in bright, easy to shop formats. Above, the flagship store in New York City.
Backed by private equity firms TSG Consumer Partners and Hancock Park Associates, the company has struggled to pay off its debt after a period of rapid expansion. RetailDive weighed in on the actions, noting that Debtwire wrote that Charming Charlie “has struggled in recent years with exposure to the highly fragmented market of fashion jewelry and accessories” but that “[t]his didn’t stop Charming Charlie from expanding by 79 stores between 2013 and 2015.”
S&P’s Melvin wrote that his team expects that the retailer’s “weak operating trends will persist” over the next 12 months, which would force the company to rely on credit for liquidity. More broadly, Melvin and his team pointed out that Charming Charlie operates in a highly competitive sector and lacks the size and scope of its larger rivals.