Crumbs Bake Shop Inc. (CRMB), the cupcake chain that abruptly closed all of its stores this week, says it isn’t dead yet.
The company is in talks with “various interested parties” as Crumbs plans its next steps, Chief Executive Officer Edward Slezak said today in a statement. The remarks follow a report that Camping World CEO and CNBC personality Marcus Lemonis is forming an investment group to do a financing and acquisition deal with the cupcake maker.
“We know that everyone has an emotional connection to the Crumbs brand and its products,” Slezak said in the statement. “We’re pleased to be in talks with various interested parties that are allowing us to pursue all of our options for the business, which includes consideration of restructuring alternatives.”
Crumbs shares rose more than 16-fold to 48 cents at the close in New York. Before the run-up, the stock had fallen 96 percent this year.
Lemonis, the star of CNBC’s reality show “The Profit,” is working with the Fischer family and would add other holdings such as Sweet Pete’s Candy to a new entity with Crumbs, the network reported today.
Before closing its stores, Slezak had been seeking new sources of revenue, including licensing and franchise deals. The former Aeropostale Inc. (ARO) executive, who took the reins at Crumbs in January, forged ties with BJ’s Wholesale Club Inc., White Coffee and Pelican Bay Ltd. this year in a bid to boost growth. That included selling its crumbnut, a croissant-doughnut hybrid, at BJ’s warehouse stores.
The efforts failed to turn around the company’s finances, a person familiar with the situation said this week. After getting a $5 million credit line from Fischer Enterprises in January, Crumbs wasn’t able to obtain additional funds, prompting it to move toward liquidation, the person said. Crumbs, based in New York, reported losses of about $23 million the past two fiscal years.
As of April, Crumbs had about 65 locations in 12 states and the District of Columbia. That number shrank to 48 in previous rounds of closings, and this week the remaining locations shut down. Crumbs had about 165 full-time employees as of the end of last year, with 120 working in the stores.
The company, which started in 2003 on Manhattan’s Upper West Side, said in a filing last week that the Nasdaq was delisting the stock. The move is expected to trigger a default on more than $14 million in debts, the company said.
To contact the reporter on this story: Selina Wang in New York at firstname.lastname@example.org