It’s not only news in the New York Times, it's also making headlines in the The Messenger of Fort Dodge, Iowa, the Midland Report-Telegram, which covers the heart of the Permian Basin of West Texas, the website of WTHI-TV10 in Terre Haute, Ind., and many a teen and tweenage girl’s social media feed: Claire’s, which says it is a “destination” for about 900 million female customers in 47 countries, is the latest retailer to file for Chapter 11 bankruptcy protection.
“Claire’s made the move as it announced it was looking to restructure $1.9 billion in debts it built up after being taken over by Apollo Global Management in 2007. The company has struggled as mall traffic has declined and becomes the latest mall fixture to declare bankruptcy following Toys R Us and Sports Authority,” according to the U.K.’s Guardian. But, with an almost audible sigh of relief, it adds that “the retailer’s international subsidiaries are not part of the U.S. bankruptcy filings, Claire’s said in a statement.”
It also says that most of its stores will remain open as it restructures.
“Claire’s said it is ‘confident' it will emerge from bankruptcy protection in September, having reduced its debt by nearly $2 billion. It believes it can compete with the shift to online shopping, arguing that its ‘iconic ear piercing services are unmatched and cannot be replicated online,’” reports the AP’s Joseph Pisani in the San Jose Mercury News. “Besides the Claire’s chain, the company also operates Icing stores. Both sell earrings, lip gloss, iPhone cases and other accessories.”
In papers filed in Wilmington, Del., yesterday, “the latest victim of the retail apocalypse” indicates “its plan to survive rests on its reputation for trendy merchandise,” report Bloomberg’s Tiffany Lary, Katie Linsell and Emma Orr.
“‘To date, the company estimates that it has pierced over 100,000,000 ears worldwide,’ Claire’s chief financial officer Scott Huckins said in court papers,” they continue.
The company, which is based in Hoffman Estates, Ill., began piercing ears in 1978. Claiming “a Claire's store is located in approximately 99% of major shopping malls throughout the United States,” it says it will be closing 92 of them across the country in March and April.
The retailer “traces its history to the founding of a chain of wig stores in the South in 1961. In 1973, the company blended with Claire’s Boutiques, a small accessories chain in the Midwest, creating Claire’s Stores,” writes the NYT’s Tiffany Hsu.
“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 like Gymboree, the Limited and Payless Shoes.”
“Ear-piercing and accompanying jewelry sales apparently proved no match for online retailers, as well as what the company said was an 8% reduction year-over-year in U.S. mall foot traffic,” observes Rick Kelley in The Herald of Brownsville, Tex., a market where Claire’s has three stores in McAllen, and one each in Harlingen, Brownsville and Mercedes.
Some observers, besides the usual mall-traffic doomsayers, weren't altogether surprised by the news.
“Accessories chain Claire’s has always kind of looked like it was going bankrupt,” is Kira Bindrim’s lede for Quartz’ Quartzy Bot. “Even during the company’s most solvent years, Claire’s locations were stuffed with cheap jewelry, handbags, and makeup, combinations of which can usually be purchased at a discount. You’ll always find a cursory ear-piercing chair, manned by a teenager packing a piercing gun that could be confused with a hot-glue gun in the dark. Even with its predictably pink-and-purple color story, Claire’s entire aesthetic reads a bit like liquidation.”
It “has lined up $135 million in financing from a group led by Citibank NA that will help get it through bankruptcy,” Becky Yerak reports for the Wall Street Journal. "The company said its reorganization is supported by holders of 72% of its first-lien debt. That group is led by Elliott Management Corp. and Monarch Alternative Capital LP.”
Business Insider’s Mary Hanbury visited a Claire’s on Broadway in New York City, between the busy shopping areas of Herald Square and Times Square, to get a feel for what it’s like to shop there now. The hed in The Hour of Norwalk, Conn., where the article ran, perhaps says it all: “It was like stepping back in time.”