CHARIVARI GETS DIP, SEEKING INVESTOR
Byline: Sharon Edelson
NEW YORK — Charivari, which filed for Chapter 11 bankruptcy protection last week, is looking for an investor. In the meantime, the store expects to sign a debtor-in-possession financing deal for $800,000 this month, the company said Thursday.
“The financing is a good start,” said Jon Weiser, Charivari’s president. “I don’t view it as a long-term solution, but at least it will enable us to compete. Short-term, I’m looking to have a fighting chance.”
Weiser said he would not disclose the identity of the DIP provider until the deal is approved in bankruptcy court.
While Charivari still has hurdles to cross before getting on sound financial footing, Jon and his sister Barbara, executive vice president, are nonetheless thinking about the long-term.
In its 30-year history, Charivari became known for being among the first to showcase, young edgy designers. But in an interview Thursday, the Weisers said a key to rebuilding the business will be to expand private label offerings with lines priced well below the designer level. The company began producing its own collections such as Sans Tambours Ni Trompettes and Artifact in the late Eighties.
“We could have an impact in the middle gap,” said Barbara, referring to a price level beneath designer but above bridge, such as $500 to $700 for a jacket. “Creating our own product allows us to have a point-of-view in that middle price range. It’s hard to find a point-of-view in that price range that’s strong, unique and modern.”
Barbara also mentioned the possibility of a joint venture for a store in TriBeCa with a designer sold at Charivari, but she declined to name the designer.
Charivari once operated six units, but is now down to one — the flagship at 18 West 57th Street, which the Weisers plan to continue operating. Since the early Nineties, the company closed four stores on the upper West Side, one on Madison Avenue, and two in Japan.
Despite the closings, the Weisers hope to open 10 to 15 “diffusion-type” stores around the country.
“We overextended in Manhattan,” Jon admitted. “Maybe there are a few other cities where [stores modeled after the 57th Street flagship] can work, but there are a lot of places that would respond to the kind of things we do at an accessible price point. That’s where a bigger business could be built.”
Barbara said the company has long wanted a store in Los Angeles and is interested in San Francisco. “We are basically an urban store,” she said. Charivari’s largest resources in women’s include Ann Demeulemeester, Comme des Garcons, Plein Sud, Dries Van Noten, Homma Yu and Darryl k.
Jon said that the company’s problems date back to the early to mid-Nineties, when the leases on some of the West Side locations came due and “landlords became greedy, wanting to triple rents.”
In addition, the West Side stores cannibalized each other, while the Charivari customer began looking for merchandise priced lower than the stores offered.
“The Upper West Side couldn’t support the price structure of the kinds of special things we did,” Barbara said. “We had a lot of real estate and I had to become more dependent on Seventh Avenue. But people felt they didn’t need Charivari for that kind of merchandise.”
“People could never understand why we had all these stores in such close proximity on the Upper West Side,” Jon said. “From a business point of view, it didn’t make sense. It was also confusing to people. We had to create different identities for each store, but people didn’t understand it. If you have six stores, they should all do the same thing. That way you get economies of scale.”
The store on Madison and 78th Street, which opened in 1990, but closed three years later, also hurt the business.
“I attribute the biggest part of our problems to the Madison Avenue store. We decided to open on a part of Madison that was certainly not the hub,” Jon said, referring to Madison Avenue above 72nd Street.
“Because of the money we spent building that store, we weren’t able to market it the way we needed to,” Jon said. “We didn’t have the funds to properly inventory it. That made the inventory in other stores lighter than it should have been and it all had a domino effect.”
The store also siphoned off sales from the 57th Street flagship, which reportedly carried the business for several years, posting about $6 million in annual sales. Jon said the flagship continues to do well.
“Going forward, long-term we would like to find a synergistic partner,” he added. “It’s not a lack of ideas, or talent or merchandising ability.”