Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Law360 (December 10, 2020, 2:08 PM EST) -- Clothing retailer Christopher & Banks said Thursday it is considering bankruptcy or a sale of the company, among other options, as it struggles with diminished sales during the coronavirus pandemic.
Minnesota-headquartered Christopher & Banks Corp. said it is working with B. Riley Securities Inc. to explore its options and has "substantial doubt about the company's ability to continue as a going concern" over the next year. The retailer cited a drop-off in in-store sales during the pandemic that wasn't fully offset by a bump in online sales, according to an earnings report released Thursday.
"While we saw sequential improvement in our sales trends in the third quarter, results did not meet our expectations," President and CEO Keri Jones said in a statement. "We have not seen the level of sales recovery that we had anticipated."
Jones said the company expects that trend could continue, leading it to explore its strategic options. The company reported net losses of $10.8 million in its third quarter, compared to net income of $0.5 million in last year's third quarter.
"As a result of our expectation that COVID will continue to negatively impact sales over the next several months, we made the decision to engage external advisers, including an investment banker, as we work to refinance our debt and explore other strategic alternatives," Jones said.
The company is considering further lease negotiations, such as concessions and deferrals; additional ways to reduce operational costs; refinancing debt; selling the company or filing for bankruptcy, the earnings statement said.
As of Oct. 31, the company had borrowed about $10 million under its credit facility, with about $6.8 million still available, and had $5 million in term loans outstanding, the statement said.
Christopher & Banks also received a $10 million loan under the Paycheck Protection Program, part of the federal government's pandemic relief package, the statement said. The company currently expects the loan to be forgiven in full.
Jones said she remains optimistic about the company's long-term prospects in a "post-pandemic world."
"If given adequate financial runway, we continue to believe in our long-term potential," she said.
A representative for the company did not immediately respond to a request for comment Thursday.
--Editing by Stephen Berg.
For a reprint of this article, please contact email@example.com.