A BELOVED 90s mall favorite is set to close 700 stores following its bankruptcy filing.
The chain is also taking on an additional $30 million in costs while it battles to stay afloat.
A beloved 90s mall favorite is set to close 700 stores following its bankruptcy filing[/caption]
Claire’s recently announced that it had filed for Chapter 11 bankruptcy in the state of Delaware[/caption]
Claire’s recently announced that it had filed for Chapter 11 bankruptcy in the state of Delaware.
It marks the second since since 2018 that the company has taken the plunge following reported late rent payments in June and July.
Following the news, Claire’s has announced its intention to close roughly 700 stores to stay in business.
Claire’s is a global brand – with more than 2,750 outlets in 17 countries in North America and Europe.
The closures will include all those found inside Walmart stores, and its entire spin-off brand, Icing, will be folded.
Claire’s is at risk of having to liquidate its entire 1,500-store footprint in North America if it fails to find a buyer.
But Chief Executive Officer Chris Cramer has expressed doubt that this will happen, given that the company has been looking for bids for months.
In a filing with the U.S. Bankruptcy Court for the District of Delaware, Cramer said: “The majority of the Company’s customers are young individuals who do not themselves have access to funds, credit cards, or the ability to shop online.
“These customers rely on their parents or caretakers to bring them to the Company’s stores so that they can see and touch the Company’s products.
“Accordingly, the Company struggled to create an online website that could compare to the tactile shopping experience that is so vital for its young customers.”
“The Company also focused on stocking its shelves with more ‘core products’ that are usable and wearable year-round, as opposed to trendy or seasonal merchandise.
“This … did not have the anticipated result on the Company’s bottom line, as the Company was left stocked with too many products that did not feel relevant to consumers.
“As a result … sales declined, necessitating heavy discounts to sell excess inventory.”
TARIFF TROUBLE
On top of this, Claire’s has been forced to take on an estimated $30 million in additional costs due to President Donald Trump‘s tariff policies, court filings indicate.
BRANDS HARD HIT BY BANKRUPTCIES
Many chains have struggled to adapt to a post-Covid retail landscape, with several companies filing for bankruptcy
JoAnn Fabrics and Crafts announced it would close all 800 stores after filing for bankruptcy twice in a year.
Hooters announced plans to file for Chapter 11 bankruptcy protection in February.
Liberated Brands announced that it would be closing all 122 retail locations for its boardsport fashion brands Quiksilver, Billabong, and Volcom.
Forever 21 shut down its headquarters after filing for bankruptcy and laying off 358 employees.
Macy’s announced major restructuring plans amid mass store closures.
This isn’t a surprise given that three-quarters of Claire’s inventory comes from China, one of the main countries targeted by tariffs.
Cramer cites Lovisa, Shein, Five Below, Ulta and Temu as taking wallet share.
The filing also reveals that Claire’s piercing business lost customers s Ulta and Five Below began to offer the service.
At the same time, tattoo parlors grew as a popular place to get pierced.
Experts have even expressed concern over the future of Claire’s.
GlobalData Managing Director Neil Saunders told Retail Dive that competitors have assortments and pricing “more attuned to what younger consumers want and has left Claire’s looking somewhat out of step with modern demand.
“Amazon and other online players have also turned the screw, especially as visits to some secondary malls where Claire’s is present have waned.”
Saunders concluded by warning that “Reinventing will be a tall order in the present environment”.
