NEW YORK — C. Wonder has lost its wonder.
The retailer has laid off all 100 of its staff and is closing its 11 remaining stores, ending an ambitious plan by founder Christopher Burch and his firm Burch Creative Capital to create a new specialty chain offering colorful, fun and relatively inexpensive women’s fashion and accessories and home goods. At one point the firm had been valued at almost $350 million.
After being laid off in a meeting at Burch Creative Capital’s Flatiron offices on Monday, employees exited the headquarters for good, one insider said. It is not yet known what will become of the floor that the C. Wonder managerial, design and merchandising teams occupied there. New York-based sales associates, who requested anonymity, said the brand plans to shutter its eight other non-Manhattan stores within the next two weeks. Remaining merchandise is expected to be liquidated in C. Wonder’s stores in the Time Warner Center, in SoHo and on lower Fifth Avenue. Staffers in those stores still did not know as of Tuesday afternoon when their respective locations would close and if there would be any sort of severance packages for management. A few sources said they expected to have a three-week window before closing for good.
Burch said Tuesday, “The retail environment is highly competitive and it saddens me that the company is taking these necessary steps today. I want to personally thank the departing C. Wonder employees for their invaluable contributions.”
It remains to be seen whether Chapter 11 will be filed or if Burch will try to salvage the C. Wonder brand or its licenses in any way. Significant lease obligations would appear to be Burch’s biggest liability for C. Wonder — commercial space at The Shops at Columbus Circle alone are said to be upward of $1,600 per square foot. It was only in late November that the company revealed it would be closing 20 of its 32 stores.
With 35 other active investments and C. Wonder to sort out, Burch presumably is not in need of things to do. One source said he is particularly revved up about his six-month-old deal with Ellen DeGeneres to develop her E.D. lifestyle label. Burch also now has more time to focus on a diverse portfolio that includes BaubleBar, his daughters’ — Pookie and Louisa — sportswear label Trademark, Five Below and Solid & Striped, as well as nonfashion companies.
In a July interview with WWD about E.D., Burch insisted he hadn’t been looking for another project of any kind. “I’m exhausted,” he said at that time. “For some reason, everyone in our industry thinks I’m [just in fashion]. I’m really not. I have 50 other things I do on a daily basis. Yes, I’ve invested in a lot of entrepreneurs in our industry. [But] I’m in technology in every category. My resorts, I really enjoy. So for me, I really wasn’t looking for anything.”
“Unstoppably enthusiastic, inventive and intuitive,” as one friend described him, Burch’s greatest stumbling block with C. Wonder may have come down to the age-old dilemma of too much, too soon. After unveiling a licensing deal with Al Tayer to open stores in the Middle East in November 2013, Burch said the company’s five-year plan was to open 250 to 300 stores in 50 countries. Unlike the company he cofounded with his ex-wife, Tory, that bears her name — which first opened a signature store in NoHo and then strategically built a wholesale business from the ground-up before rolling out other freestanding stores all around the world — Burch charged straight into retail with C. Wonder. He invested heavily in its infrastructure and foreign sourcing even though demand for products hadn’t advanced to that grand scope, according to one source.
C. Wonder had a troubled existence from the start, though. The colorful kitschy, low-cost label was a point of legal contention between the Burches in November 2012, when Tory Burch filed a response and counterclaims to Christopher Burch’s earlier lawsuit against her. The crux of their dispute hinged on whether the C. Wonder concept was too similar to the Tory Burch brand in terms of its product and store design. The couple started the Tory Burch company in 2003 and divorced in 2007. Christopher Burch’s initial legal action claimed that his ex-wife and board members of her company had interfered both with his business and his effort to sell part of his 28 percent stake in the Tory Burch brand. In January 2013, the Burches said they had settled the legal claims between them, but not before presiding Judge Leo Strine made some choice comments about the Burches’ products and the fashion world in November 2012. Strine, of the Delaware Chancery Court, said, “I think if you read Cheever, go see the new Virginia Woolf revival and watch ‘Mad Men,’ we’ll be all geared up and in the mood for this sort of drunken WASP fest.”
On the image of the WASP, Strine said, “Honestly, there are hundreds of people in New Castle County who could make a bunch of clothes if you gave them the catalogues. I’m not saying Mr. Burch — it’s going to be interesting, because there’s what Tory Burch was before she met Christopher Burch, and there’s what Christopher Burch was after Tory Burch became the Tory Burch in The New York Times, and there’s maybe influences that go in a lot of directions here. There probably are lots of catalogues people could see. There are all kinds of dream images of the world. The WASPs, right?”
However indomitable Christopher Burch may be about investing and generating creative ideas, he has a reputation for leaving the day-to-day operations to full-time staff, while juggling too many projects at once. In May, he tapped Harlan Kent to join C. Wonder as chief executive officer, succeeding former president Andrea Hyde, who left to become ceo of Reese Witherspoon’s lifestyle company.
Irving Place Capital ceo John Howard considered C. Wonder’s demise to be an anomaly in Burch’s career. “When you look at his track record, he is in the Hall of Fame of investors. He made that SoHo store a happening — it was a point of excitement,” Howard said.
Laden with an assortment of vibrant-colored, low-cost sportswear, accessories and home decor items, that 7,200-square-foot boutique was the first to open in October 2011. Such unexpected features as fitting rooms with touch screens where customers could tweak the lighting or change the music were an attraction with shoppers. While common today, C. Wonder also was among the first New York retailers at that time to equip sales associates to check-out customers via iPod Touches anywhere in the store.
However tech-savvy those stores may have been, staffers in some of them learned of their layoffs via the Internet. While store managers in the company’s 11 freestanding locations were clued into the planned closings Monday during a conference call, some staffers first heard of their pink slips via a BuzzFeed report.
The Columbus Avenue store employs about 25 people and the SoHo flagship has a staff of about 40. Headhunters for such firms as Tommy Hilfiger, Lord & Taylor and Scotch & Soda had already swept in Tuesday contacting select store managers about potential jobs. “Management was too late to react to what was going on and that’s why they had to pull the plug. They should have done something a year ago instead of last fall,” one C. Wonder employee said Tuesday. “That’s why they had to close all the stores.”
While sales in the Spring Street location were relatively healthy, the volume, overhead and expense of more lackluster locations dragged down the business, a staffer said. A salesperson at the C. Wonder store in The Shops at Columbus Circle described recent sales as “fairly OK” Tuesday, even though that location’s seasonal markdowns were considerably more aggressive than other locations.
In fall 2012, Burch said he was delaying the launches of Electric Love Army and Number 9 Christopher, to zero in on C. Wonder and Monika Chiang. “We’re concentrating our full resources on these efforts,” he said at that time. By February 2013, Boston-based investment giant Fidelity took a 10 percent stake in C. Wonder, according to sources. The hedge fund reportedly paid $35 million, giving C. Wonder a lofty $350 million valuation at that time.
More recently, Burch faced uneven sales with C. Wonder. Burch Creative Capital staffers denied a report in late November that all of the stores would be shut, claiming that wholesaling would be introduced. As of Tuesday, at least one executive thought that really had been the plan, noting that Monday’s news caught even senior employees off-guard, leaving them to wonder what went wrong as well.