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.
The company has a store at Bellingham’s Bellis Fair mall as well as in the Cascade Mall in Burlington. At the Bellis Fair store, Claire’s is known as a place for teens to get their ears pierced but also has a variety of fashion accessories.
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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. Burdened with debt from a leveraged buyout in 2005, the toy giant struggled to adjust quickly enough to fast-changing consumer tastes and e-commerce encroachment.
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 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 1,641 in 2016.
Claires said it was up to date with its vendor payments and had “ample liquidity.” It plans to emerge from bankruptcy in September, before the critical holiday season.