Claire’s Stores, a fashion accessories retailer primarily known for providing ear piercings to teen and preteen customers, is preparing to file for bankruptcy, according to Bloomberg. Like other chains with a heavy mall presence, Claire’s has had to contend with declining customer traffic and online competition. The retailer’s specific burden, however, is $2 billion in debt.
The potential bankruptcy reads like stories from other private equity-backed companies that have filed for Chapter 11. Claire’s situation is similar to the plights of many retailers including Vitamin World, Toys ‘R’ Us, Wet Seal, The Limited, Payless ShoeSource and Gymboree.
More than $1.4 billion of the retailer’s debt matures in 2019, and more immediate pressure comes from a $60 million interest payment that's due March 13.
Efforts to reposition the chain away from its mall-based roots include Claire’s expanding to new arenas by offering select jewelry products and other accessories at Giant Eagle supermarkets and CVS drugstores.
The retailer has been a top contender for bankruptcy since 2016, with Moody’s Investors Service and Fitch Ratings both listing Claire’s as a distressed retailer in risk of defaulting.A few of the retailers named in both lists filed for bankruptcy in 2017, including Gymboree, Rue21, True Religion Apparel and Charming Charlie.
Apollo paid $3.1 billion to acquire Claire's from the family of founder Rowland Schaefer in 2007 and began expanding rapidly. The retailer added approximately 350 stores between 2010 and 2013, and operated more than 2,700 globally by the time it filed plans that year to go public. But the retailer struggled to remain profitable after the Apollo buyout, and Claire's withdrew its IPO registration in early 2017.