Claire’s is reportedly planning to file for bankruptcy due to having a huge debt. The jewelry store popular for being a tween’s first stop when getting their ears pierced may no longer be in local malls after the filing. According to Business of Fashion, the brand will be transitioning control from Apollo Global Management LLC to creditors and a few investment groups, due to the company’s large debt of $2 billion.
It has also been reported that the current debt is more than 10 times of what the brand is engrossing per year. A huge part of the pressure comes from $1.4 billion of debt that will mature next year and $60 million of interest payments that are due March 13th. Filing for a Chapter 11 bankruptcy will allow the chain to continue working while keeping creditors at bay until a formalized plan is made.
Where it’s likely that the downfall of the fashion accessories chain comes from numerous different reasons it seems the label’s previous business deal may have something to do with it. During 2010-2013 when mall retail was at its crown glory, Apollo Global Management LLC added 350 Claire’s stores to hundreds of malls around the country totaling approximately 2,000 stores. Due to the increase and conventional aspect of online stores mall sales have declined tremendously, affecting the brand directly as store traffic is at an all time low.
Like many other classic traditional stores, Claire’s has been having a difficult time adjusting to the fast pace of online shopping and fast fashion. The brand has been working towards finding other avenues of revenue by having agreements to sell in CVS pharmacies and Giant Eagle supermarkets, but that hasn’t helped the label remain afloat.
The store was a classic for many teens, but today it may be time to run to the local mall and purchase as many accessories as possible just in case tomorrow there is really no longer a Claire’s.
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