Charlotte Olympia is looking at bankruptcy liquidation sales in the U.S. as an opportunity to off-load a wider range of previously unsold merchandise.
Charlotte Dellal’s troubled luxury footwear and accessories brand on Monday received approval from a Delaware bankruptcy court judge to tack a weeklong “sample sale” onto the store liquidation sales that will see the brand’s small chain of stores here close, likely by the end of this week.
While store closing sales are a typical part of bankruptcy, a “sample sale” is not. Charlotte Olympia asked to add one in a motion last week, in order to “sell a significant portion of older inventory (as well as certain inventory not sold during the store closure sales) from prior seasons” in late March at a showroom in New York.
The court approved the idea, saying it showed “sound business judgement.”
When Charlotte Olympia filed the request, it offered additional background as to why it sought to liquidate its U.S. operations last week, as first reported by WWD. The brand pointed to a “challenging commercial environment exacerbated by increased competition from traditional competitors,” along with the oft-cited “shift” to online shopping that left its store locations “operating at sub-optimal performance levels.”
Charlotte Olympia added that its U.S. stores “have never been profitable” and “prolonged losses” led to the decision to liquidate.
In addition to the liquidation sales, the court approved a $410,000 debtor-in-possession loan to fund the wind-down of the U.S. business provided by Three14, Charlotte Olympia’s corporate affiliate in the U.K.
The brand has six retail locations outside the U.S., in Russia, Thailand, United Arab Emirates and the U.K. While it’s unclear how those stores are performing, according to public Three14 records filed in January, Charlotte Olympia lost 6.41 million pounds in fiscal 2017, which ended last March, and lost 5.68 million pounds in fiscal 2016.
Last year, the brand was said to be entering a “strategic partnership” with Onward Kashiyama, the operator of Jil Sander, Joseph and J. Press. Onward’s OLG shoe division owns 51 percent of the company. Despite years of losses, Three14 said Charlotte Olympia, through its partnership with Onward, “is exceptionally well-placed to achieve its ambitious revenue growth in the context of a more appropriate and streamlined operating structure.”
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