Crumbs Bake Shop reportedly close to securing financing from group of investors; CEO says company pursuing all options, including 'consideration of restructuring alternatives'
July 11, 2014
(The New York Times Co.)
– It’s not over for the Crumbs cupcake yet.
When Crumbs Bake Shop said on Monday that it was shutting all of its stores, dessert aficionados lamented the loss of their frosted confection. Loyal customers rushed to see if they could buy a final dozen. Someone bid $255 for a Crumbs cupcake listed on eBay.
But by Thursday, Crumbs was said to be close to securing financing from a group of investors including Marcus Lemonis, the chairman and chief executive of Camping World and Good Sam Enterprises and star of the CNBC reality show “The Profit,” about saving small business.
According to CNBC, Mr. Lemonis is teaming up with Fischer Enterprises, which bought Dippin’ Dots out of bankruptcy in 2012, to provide financing that could eventually lead to a deal to buy the company.
In a statement, Edward M. Slezak, the chief executive and general counsel of Crumbs, said, “We know that everyone has an emotional connection to the Crumbs brand and its products and 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.”
Those following Mr. Lemonis on Twitter may not be shocked by the latest news. On Tuesday, he posted somewhat cryptic tweets in response to articles about Crumbs closing. “Stay tuned,” he wrote. “Not so fast.”
On Thursday, a spokesperson for Mr. Lemonis said, “Marcus Lemonis is discussing options with his partners and he has no comments to make at this time.”
Shares of Crumbs were up more than 1,000 percent to more than 50 cents, from 3 cents, on Thursday in over-the-counter trading.
Founded in 2003 by Jason Bauer, and his wife, Mia, Crumbs attracted customers with its signature four-inch cupcake in flavors like cookie dough and milkshake. The company went public on the Nasdaq stock market in 2011, at the height of the gourmet cupcake craze, through a $66 million merger with an investment company, the 57th Street General Acquisition Corporation.
When the company went public, it had 34 stores in six states. Mr. Bauer said at the time that he planned to expand to 200 stores by 2014.
But as other high-end cupcake stores began expanding across the country, the market became oversaturated.
With its revenue declining even as it continued to open stores, the company reported a loss in 2013 of $18.2 million, on top of the $10.3 million loss it posted in 2012, according to filings with the Securities and Exchange Commission. As of March 31, the company operated just 65 stores across 12 states and in Washington and was continuing to close ones that were not performing well.
The Nasdaq suspended trading of the company’s stock on July 1. In its filing with the S.E.C., Crumbs said the Nasdaq had based its decision to delist the company on its failure to comply with a minimum stockholders equity requirement of at least $2.5 million.
Copyright 2014 The New York Times Company