4 days ago
Mall staple Claire's has filed for bankruptcy twice. Here's what could happen to the brand now
Longtime mall staple Claire's has begun liquidating its stores after filing for bankruptcy for a second time in seven years.
The tween accessories retailer was once a thriving retailer. From fiscal 2000 to fiscal 2007, the company grew its annual sales from $846 million to $1.48 billion. But by 2018 it had filed for bankruptcy protection for the first time. It was taken over by creditors Elliott Management Corporation and Monarch Alternative Capital, who eliminated $1.9 billion of debt.
Despite some sales momentum in 2021, attempts by Claire's to modernize in an e-commerce world failed to re-energize the brand.
Turnaround efforts over the past couple of years included expanding retail partnerships with companies such as Walgreens and Walmart, a loyalty program rollout, and investments in influencer-led content.
But now the company is in need of saving once again.
"Claire's was not immune from the continued trend away from brick and mortar and more recent macroeconomic challenges, including higher interest rates, labor costs and, most recently, tariffs," the company said in a bankruptcy declaration filed Wednesday. "While Claire's took many steps over the last few years to address these and other challenges, it was not enough to overcome the obstacles."
At least nine other major retailers — including Party City, Z Gallerie, Forever 21 and Rite Aid — have filed for bankruptcy at least twice within the past 10 years.
"What we're typically seeing in the last year are these repeat filers is that they are just liquidating and closing down their stores, maybe with some online presence continuing," said Sarah Foss, global head of legal at Debtwire.
In its bankruptcy declaration, Claire's said it had contacted over 150 potential buyers in the months leading up to its bankruptcy and received multiple letters of intent, which it is continuing to negotiate. The deadline for a buyer to acquire the company is tentatively set for August 31.
Josh Holmes, head of research at Retail Economics said its longstanding legacy in the American mall could help save it.
"Its ear piercing service became a sort of rite of passage for many," Holmes said. "That nostalgia, the retro element is something I think actually does hold value and something that potential investors will look at and consider in terms of if they are to come in and rescue the brand."
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