Bankruptcy Court Authorizes Sale of Christopher & Banks' E-commerce Division
In a move reflecting the ongoing trend of retail brands transitioning to online sales amidst the challenges posed by the COVID-19 pandemic, women's apparel seller Christopher & Banks has agreed to sell its e-commerce business to an affiliate of Hilco Merchant Resources.
The retailer, which has been hit hard by the pandemic, initially reached out to over 200 parties for a potential sale, but most declined to pursue a deal. Three parties expressed interest in buying Christopher & Banks' e-commerce assets, according to court papers. However, the sale was scheduled for an auction, with no other qualified bids emerging other than a stalking horse bid from the buyer.
The purchase price for Christopher & Banks' e-commerce business, under the bid, consists of the value of the term loan ($8.1 million) and other assumed liabilities. The sale comes with a closing cash payment of $12.7 million.
The growth in Christopher & Banks' e-commerce business last year was due to a decline in store-based and overall sales caused by the pandemic and temporary store closures. Despite the challenging circumstances, e-commerce sales grew by nearly 28% year over year to $71.2 million through October, as reported in the latest financial report.
This approach of selling off e-commerce assets or intellectual property to other companies, often specialists in retail asset management like Hilco Merchant Resources or established brand operators like Authentic Brands Group, is a pattern seen in several bankrupt retail brands. Notable examples include A.C. Moore, Lucky Brand Dungarees, and Honey-Can-Do International, LLC.
If the sale goes through, Christopher & Banks would join a growing number of brands that have transitioned to online-only sales after liquidating in bankruptcy. The federal bankruptcy court has approved the sale, and a deadline for "qualified" bids has been proposed for February 17, followed by an auction on February 19, a sale hearing in bankruptcy court on February 22, and a target closing date of February 26.
In a statement, the CEO of Christopher & Banks described the digital business as an "attractive asset." The company filed for Chapter 11 with plans to liquidate its entire footprint of nearly 450 stores.
- The sale of Christopher & Banks' e-commerce business to an affiliate of Hilco Merchant Resources is part of an industry pattern, with several bankrupt retail brands selling off their e-commerce assets to specialize in retail asset management firms or established brand operators.
- AI and finance experts predict that the pandemic has significantly accelerated the update of business models in retail, with more retail brands, like Christopher & Banks, expected to transition to online-only sales.
- In a bid to mitigate the impact of the pandemic, Christopher & Banks initially reached out to over 200 parties for a potential sale of the entire business, but only three expressed interest in buying the e-commerce assets, with no other qualified bids emerging other than a stalking horse bid from Hilco Merchant Resources.
- With the sale of its e-commerce business, Christopher & Banks is poised to compete in the evolving retail industry, leveraging emerging AI and fintech solutions to offer personalized online shopping experiences and improve financial performance.
