Christopher & Banks was founded in 1956, but based on numbers from its most recent 10-Q the firm might not be around much longer.  The Minnesota-based company sells clothing to female baby boomers at 448 stores in 44 states across the U.S.  Christopher & Banks was already in the midst of an attempted turnaround when it was forced to close its stores on March 19 due to the pandemic.  Although 400 stores were re-opened by June 12, significant damage had been done.

The cash balanced dropped from $3.2 million to $183 thousand in just three months.

Yes, that’s right.  $183 thousand.

This company’s in trouble.  The $10 million it received from the PPP (Paycheck Protection Program) kept Christopher & Banks afloat, but the company must do everything it can to cut costs.  So far, it has:

  • Reduced corporate salaries by 20 to 50%
  • Suspended most capital expenditures
  • Canceled inventory orders for spring and summer
  • Asked its suppliers for more time to pay
  • Stopped paying rent

The good news is that one-third of the company’s store leases expire in 2020, so Christopher & Banks can (1) close unprofitable stores without having to pay a lease termination fee and (2) negotiate more favorable lease terms on stores it plans to keep.  Christopher & Banks hired a real estate consulting firm to help with the lease structuring, which just goes to show that yes, there really are consulting firms for everything.

Christopher & Banks also hired a different consulting firm to help with cost reductions, so some of the corporate staff could be fired.  And maybe they should be fired, since the company’s e-commerce sales actually decreased by 10% during the quarter.  I’m assuming this means that most of their online sales were of the “pick up at store” variety, but in any case a decrease in online sales during a time when people were stuck inside their homes is shameful.

If you’re tempted to attribute all the company’s problems to COVID-19, bear in mind that Christopher & Banks had negative cash flow from operating activities not just in the first quarter of 2020 but also in the same quarter the year before.

Thus, it’s difficult to see a path forward for Christopher & Banks.  The constant cash burn means the company will go bankrupt in the next year or two unless it’s able to borrow more.  If its credit dries up, Christopher & Banks is done.

Here’s a link to the company’s 10-Q in case you’d like to review the carnage:

Christopher & Bank’s 10-K

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