The retail apocalypse has continued to grow as a combination of rising labor and product costs driven by inflation, rising interest rates on debt obligations, over-market lease rates, and changing consumer attitudes toward shopping continues to drive retailers to sell assets, close stores, and file for bankruptcy.
Teen apparel and accessories sector faces distress
The teen apparel and accessories sector has faced distress since the Covid-19 pandemic, as major retailers like Justice, which closed down in 2021, and Forever 21, which closed this year, have liquidated in bankruptcy.
Related: Beloved sandwich chain franchisee closes in Chapter 11 bankruptcy
And now, the parent company of popular teen girls' jewelry and accessories retail chain Claire's has filed for Chapter 11 bankruptcy protection with plans to either sell its assets or liquidate and close its stores.
Claire's files for Chapter 11 bankruptcy protection
Claire's Holdings LLC and 13 affiliates filed their petition in the U.S. Bankruptcy Court for the District of Delaware, listing $1 billion to $10 billion in assets and liabilities on Aug. 6.
The retailer filed for bankruptcy for the first time in 2018, eliminating $1.9 billion in debt.
The debtor listed about $690 million in total funded debt obligations in court papers.
The debtor's largest unsecured creditors include Studex Corp., owed $10.8 million; Premium Retail Services LLC, owed over $1.6 million; and Inspired Thinking, owed over $1.2 million.
The Hoffman Estates, Ill., debtor blamed a challenging environment over the last few years caused by macroeconomic and retail-specific market pressures, including reduced foot traffic in stores, a rise in interest rates, inflation, tariffs, heightened competition from comparable retailers offering substantial discounts, and a disparity between inventory and customer demand, according to court documents seeking authorization to close stores.
Rising tariff costs also severely impacted the company.
Related: Famous gunmaker files for Chapter 11 bankruptcy, closes
Claire's seeks to close store locations
Claire's filed a motion seeking approval to liquidate and close 18 stores in 13 states initially and to subsequently close an additional 1,326 locations through further filings.
The debtor will likely liquidate and close all of its stores if it is unable to find a buyer willing to continue operations as a going concern.
The debtor sought approval to close its Hoffman Estates warehouse and corporate offices, as well.
Store closing sales are expected to begin Aug. 8 and conclude by Oct. 31, 2025, according to the store closing motion.
Claire's store assets:
- Claire's stores in North America and Europe: 1,970.
- Icing stores: 120.
- Claire's franchises in the Middle East and South Africa: 230.
- Claire's Store-In-Store Walmart locations: 210.
- Claire's North America and Europe Concessions: 9,000.
Claire's operates about 2,300 stores, consisting of about 1,970 Claire's stores in 17 countries throughout North America and Europe, 210 Claire's store-in-store locations in Walmart stores, and 120 Icing stores. It also has 230 Claire's franchises in the Middle East and South Africa, and 9,000 concessions in North America and Europe, according to court papers.
Claire's proposed initial store closings:
- Alabama (1)
- California (2)
- Illinois (1)
- Massachusetts (1)
- Michigan (2)
- Minnesota (1)
- New Jersey (1)
- New York (1)
- Pennsylvania (1)
- Tennessee (1)
- Texas (1)
- Utah (3)
- Washington (1).
"This decision is difficult, but a necessary one. 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," Chris Cramer, CEO of Claire's, said in a statement.
"We remain in active discussions with potential strategic and financial partners and are committed to completing our review of strategic alternatives," Cramer said.
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