Teen retailer Claire’s, struggling with debt, announces its Chapter 11 filing.
After 100 million ears pierced, retailer joins the trek to court
For four decades Claire’s jewelry chain has been a fixture at malls and shopping centers, piercing the ears of millions of American teenagers.
But the company, which says it has pierced more than 100 million ears worldwide, is now struggling financially, with a heavy debt burden. And like so many other retailers, it is looking for help in bankruptcy court.
On Monday, Claire’s filed for Chapter 11 bankruptcy protection in Delaware, hoping to shed $1.9 billion in debt and close some underperforming stores. The chain, which said it operates in 99 percent of U.S. malls, selling low-priced cubic zirconia jewelry and other accessories, was purchased by private equity firm Apollo Global Management for $3.1 billion in 2007.
Claire’s called the filing an attempt to restructure its balance sheet, not its operations. The company, which earned $29 million in profit last year and $1.3 billion in revenue, said that it was far healthier than fellow retailers that have also turned to bankruptcy — a growing list that includes mall regulars such as Gymboree, the Limited and Payless Shoes.
Toys R Us, which often carried Claire’s products, said last week that it would liquidate or sell all of its 730 stores in the United States.
But Claire’s, which presents itself as “A Girl’s Best Friend,” is hoping for a happier transition. The chain said that its ear-piercing business is Amazon-proof because customers must show up in person for the service.
In a regulatory filing, the company, based in Hoffman Estates, Ill., acknowledged that mall traffic is declining and that it planned to close some of its underperforming stores and renegotiate leases.
The chain, which also owns the Icing brand, a jewelry chain targeting older shoppers, projected that its total store count in North America would slide to 1,400 locations in 2022 from 1,570 at the end of last year.
Claire’s plans to emerge from bankruptcy in September, before the crucial holiday season.
“We will complete this process as a healthier, more profitable company, which will position us to be an even stronger business partner for our suppliers, concessions partners, and franchisees,” Ron Marshall, Claire’s chief executive, said in a statement.