As a long-standing staple in shopping malls, Claire’s is facing a severe test. This retailer, which focuses on tween accessories, has launched store liquidation procedures after filing for bankruptcy for the second time in seven years, and its past glory in the industry is gradually fading into the past.
Looking back at its development history, Claire’s once had a golden period of growth. From fiscal 2000 to fiscal 2007, its annual sales soared from $846 million to $1.48 billion, becoming a highly sought-after retail brand. However, the good times did not last long. In 2018, the company fell into crisis for the first time and filed for bankruptcy protection. It was then taken over by creditors Elliott Management Corporation and Monarch Alternative Capital, which wrote off $1.9 billion in debt for it, helping it get through the difficult time temporarily.
Although there were signs of a recovery in sales in 2021, Claire’s transition in the e-commerce era has not been smooth. To reverse the decline, the company has taken a series of measures in the past few years: expanding retail cooperation with giants such as Walgreens and Walmart, launching a loyalty program to stabilize its customer base, and increasing investment in content creation led by internet celebrities. Unfortunately, these efforts failed to successfully inject new vitality into the brand, and now the company is once again on the verge of needing to be saved.
In the bankruptcy declaration filed on Wednesday, Claire’s admitted that it was overwhelmed by the continuing trend of declining physical retail, coupled with recent macroeconomic challenges such as rising interest rates, increasing labor costs, and tariff adjustments. “Despite taking many countermeasures in the past few years, they were still insufficient to overcome these obstacles.”
In fact, Claire’s predicament is not an isolated case. In the past 10 years, at least 9 major retailers such as Party City, Z Gallerie, Forever 21 and Rite Aid have gone through bankruptcy at least twice. Sarah Foss, global head of legal at Debtwire, pointed out that in the past year, such companies that have gone bankrupt multiple times have often chosen to liquidate and close their stores, retaining only part of their online business.
However, Claire’s is still actively looking for a way out. According to the bankruptcy declaration, in the months before filing for bankruptcy, the company had contacted more than 150 potential buyers, received multiple letters of intent, and the negotiations are still ongoing. The tentative deadline for the acquisition by a buyer is August 31.