Claire’s Stores Inc., once a teen retail staple, has filed for bankruptcy protection for the second time in seven years as it contends with significant debt.
The retailer filed for Chapter 11 bankruptcy protection in a federal court in Delaware on Wednesday, highlighting the “difficulty facing mall-based retailers geared to the teen and tween customer,” according to Sarah Foss, head of legal at Debtwire.
In the filing with the U.S. bankruptcy court in Delaware, the U.S. firm, primarily owned by Elliott Management and Monarch Alternative Capital, estimated both its assets and liabilities at between $1 billion and $10 billion, underscoring the financial strain that led to its latest filing.
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The filing comes shortly after the company tapped Houlihan Lokey Inc. to find potential buyers for some or all of Claire’s locations, people familiar with the matter told Bloomberg. Claire’s is also facing a $500 million loan that’s due in December 2026, Bloomberg reported. It also decided to defer interest payments on its debt to help preserve capital.
In better times, the store targeted a younger demographic with a wide selection of affordable jewelry, hair accessories and beauty products. Today, the retailer, which sources from China, is facing higher import costs due to President Trump’s tariffs. Consumers are also curbing their spending in response to the current economic climate.
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One of the company’s other core challenges, according to Foss, is that its target demographic “is notoriously fickle and heavily influenced by the trends they are seeing online, leaving some of the mall mainstays like Claire’s or Forever 21 struggling to keep up with the changing trends and preferences of its customer base.”
Claire’s first filed for bankruptcy protection in March 2018/ Elliott and Monarch took control of the retailer when it emerged later that year.
Foss said a bankruptcy filing can be a good option for a struggling retail chain as it allows a company to refocus, trim its debt and slim down its retail footprint, but “retailers that have emerged from Chapter 11 only to file again a few years later often find themselves liquidating and shutting their doors entirely, with some kind of online presence remaining.”
However, the company still hasn’t filed a document outlining its proposed path in bankruptcy.
The company operates under two brand names: Claire’s and ICING. There are more than 2,750 Claire’s stores in 17 countries throughout North America and Europe and 190 ICING stores in North America. There are more than 300 franchised Claire’s stores, located primarily in the Middle East and South Africa. Claire’s products are also sold in thousands of concessions locations in North America and Europe, according to its website.
The company filed to go public in 2021, after its first attempt to list in 2013 failed. In June 2023, the company formally withdrew IPO plans, according to a filing with the U.S. Securities and Exchange Commission.
Reuters contributed to this report.
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