RedEnvelope Files for Bankruptcy, Gets New Buyer

by Deidre Woollard (RSS feed)
Apr 21st 2008 at 7:02AM

Popular catalog and online gift company RedEnvelope has fallen on hard times. On Friday the company reported that it filed for Chapter 11 bankruptcy protection on April 17 with the US Bankruptcy Court for the Northern District of California, San Francisco. The company will also be sold. They have entered into an agreement with Creative Catalogs Corp. to purchase RedEnvelope's assets and assume some of the company's liabilities for $5.7 million. RedEnvelope has also gotten a $4.5 million debtor-in-possession credit facility and loan from Creative Catalogs and Granite Creek FlexCap so that the business does not have to shut down during the transition process (guess that explains why their catalog is still showing up in my mailbox). The final sale price will be will be less the outstanding amount from that loan.

The nine-year-old company was one of the few e-commerce sites with a successful catalog business but the recent tough economic climate and the bank's stricter lending policy for retailers found the company in trouble this year. The company catered mainly to the middle class and upper middle class brackets which are now cutting back on spending due to economic concerns. Order shipments had dropped 20% during the third quarter compared to last year. DM News says that in February, RedEnvelope reported a loss of $4.3 million versus a net income of $5.3 million during the same time last year. The RedEnvelope sale must be completed by May 30 and during that time RedEnvelope can accept other bids.

Tags: bankruptcy, catalog, gifts, red envelope, redenvelope, retailer

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Reader Comments (Page 1 of 1)

rebecca Apr 21st 2008 10:38PM

That's because their products are ridiculously overpriced. You can find almost all their products elsewhere and pay a fraction of the price. They did a great job of marketing their image to people willing to overpay for a little red box....I'm sure a high percentage of those people did so as to show their friends just how much money they had spent on their gift.

Barbara Apr 21st 2008 11:08AM

I love Red Envelope and have ordered from them often throughout the years. I hope Creative Catalogs can provide the same quality goods for sale.

Amy Apr 21st 2008 11:56AM

I ordered several hundred dollars worth of gifts from Red Envelope at Christmas time. The quality of the merchandise as compared to the price was quite a disappointment. So it is not surprise to me that this company went under.

Dorothy Apr 21st 2008 12:32PM

I agree with Amy. While merchandise was interesting, it was way overpriced. Good idea, but greed made it a bad value. Not surprised to see they didn't make it work.

Lynda Apr 21st 2008 3:25PM

I too bought over the years and loved their packaging. If you are in need of unique/eco-friendly/stylish/useful gifts I encourage you to check out Delight.com.

sharptailguy Apr 21st 2008 12:50PM

Say it isn't SOOOOOOOOOOOOOOOO!!!

Delores Parron Apr 21st 2008 1:18PM

I am so sorry that Red Envelope has been devastated. I have enjoyed their catalog and have ordered unique items from them. I didn't find the merchandise overpriced. The customer service was excellent especially when I ordered multiple monogrammed items for friends and family . Anyone to whom I sent a Red Envelope gift was delighted! I hope the new buyer will offer the same.

renee Apr 21st 2008 1:44PM

very sad to see another company file

this is a cool company - I like how they give new designers and artist opportunities

hope it works out for them

http://mensfashionsadvice.com

Jeff Apr 21st 2008 1:47PM

They do have some neat gifts but I agree that they were always overpriced. I've started shopping at http://www.PersonalizationMall.com
They have some of the same type of gifts but I think you get more bang for your buck there.

Chanel Apr 21st 2008 4:24PM

Wow, they did have great merchandise. I have purchased from them also.
Great deals are also at http://executees.net

suzanne Apr 21st 2008 4:52PM

Their mark-up was obsene and the merchandise was available elseware for much less.

j Apr 21st 2008 5:15PM

I received a gift from someone who thought Red Envelope was IMPRESSIVE as they had seen Dr. Phils wife Robin give away a bracelet from them. I wasn't impressed.

teltech54 Apr 21st 2008 5:47PM

This is by no means the last company to go belly up. The frequency of announcements like this should start growing by mid to late summer after the price of gas goes beyond $4.00 per gallon. The frequency will double when gas goes to $4.50 around labor day and $5.00 a gallon by the end of this year.

Jennifer Apr 21st 2008 6:00PM

Personalize Mall is very expensive I bought a robe from them for 75

tom Apr 21st 2008 6:34PM

I say, blame everything on the oil companys lol

Jenny Apr 22nd 2008 11:51AM

I ordered a gift for a friends 40th birthday, what a dissapointment! the stones on the pendant were cheap and the price was not! When I emailed redenvelope my compliant I never got a response. I am not surprised that they have gone bankrupt.

Keith Apr 25th 2008 5:34PM

I think this is a company that truely has fallen victim to poor leadership. A 3 years ago they had items that were mid-range priced and incredibly unique. I read an article a year or two ago that they had started to lose money and they thought the fix would be to carry more expensive items. That would be fine if the items would have been of more value however, they took the same quality of items and jacked up the price which was completely ridiculous. I suppose they thought customer's wouldn't notice?! That coupled with their extremely poor selection of fall and Christmas items last year did them in. Too bad it WAS a great company and a fun idea while it lasted...