Claire’s filed for bankruptcy Wednesday as the mall staple for tweens drowns in a “cocktail of problems” that include mounting debt, intense competition and higher costs from President Trump’s tariffs.
The retailer, which sells jewelry and ear piercing services, listed its estimated assets and liabilities each between $1 billion and $10 billion as it sought Chapter 11 protection in a Delaware court.
It was the second time Claire’s filed for bankruptcy in seven years.
“This decision is difficult, but a necessary one,” CEO Chris Cramer said in a statement.
“Increased competition, consumer spending trends and the ongoing shift away from brick-and-mortar retail, in combination with our current debt obligations and macroeconomic factors, necessitate this course of action for Claire’s and its stakeholders.”
All of the chain’s roughly 1,325 locations, incluiding its Icing spinoff stores, are expected to be shuttered by Oct. 31 as part of Claire’s agreement with a liquidation firm, according to the filing.
The chain has been dealing with a “cocktail of problems, both internal and external, that made it impossible to stay afloat,” Neil Saunders, managing director of GlobalData, said in a note Wednesday.
The company, founded in 1961 by the late Chicago entrpreneur Rowland Schaefer, first filed for bankruptcy in 2018 amid a broader foot traffic slump at shopping malls.
It was able to emerge out of bankraputcy that same year after a group of creditors, led by Elliott Management and Monarch Alternative Capital, eliminated approximately $1.9 billion of debt from its balance sheet and helped it gain access to $575 million in new capital.
Clair’re filed to go public for the second time in late 2021 after its failed attempt to list in 2013, but withdrew its IPO plans in June 2023, according to a filing with the Securities and Exchange Commission.
Claire’s has failed to keep up with competition as teens increasingly shop online.
It also has a $496 million loan due in December 2026 and it has stopped paying rent payments on unprofitable stores, according to Debtwire.
Tariffs aren’t helping the situation, as the retailer’s business model depends heavily on its ability to import goods from China, Cambodia and other Asian nations that manufacture clothing and accessories at low price points.
“Claire’s has struggled to simultaneously manage its debts and service day-to-day operations. The prospects of it being able to pay loans as they become due are extremely slim,” Saunders said.
“There is likely a place for Claire’s, but it will need to use bankruptcy to slim down, shed debt and shutter weaker stores,” he added.
“Reinventing will be a tall order in the present environment.”
Forever 21 and Rue 21, which also largely cater to teen audiences, both filed for bankruptcy earlier this year.
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