64 year old retail chain files for bankruptcy, closing up to 1,300 stores due to tariffs & more
A mall staple known for jewelry, accessories, and of course, ear piercings, has filed yet again for Chapter 11 bankruptcy, this time potentially closing over a thousand stores.
Claire’s was founded in 1961 and has around 1,500 stores around North America, and 2,300 globally.
But the 64 year old retail chain said in court documents they need to immediately initiate store liquidation sales, blaming financial woes on online competitors, plus the shift away from malls in general. Court documents also show state tariffs hit this year, and nearly three-quarters of Claire’s inventory comes from outside the U.S., primarily from China. As of June 23, the estimated cost of goods sold increased by $30 million due to higher tariffs, according to the court filings.
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“The majority of the Company’s customers are young individuals who do not themselves have access to funds, credit cards, or the ability to shop online,” Claire’s CEO Chris Cramer told the court. “These customers rely on their parents or caretakers to bring them to the Company’s stores so that they can see and touch the Company’s products. Accordingly, the Company struggled to create an online website that could compare to the tactile shopping experience that is so vital for its young customers.”
To offset the higher cost of goods in general, Claire’s raised their prices and changed some of their inventory, and Cramer said this backfired. “The Company also focused on stocking its shelves with more ‘core products’ that are usable and wearable year-round, as opposed to trendy or seasonal merchandise,” he said. “This … did not have the anticipated result on the Company’s bottom line, as the Company was left stocked with too many products that did not feel relevant to consumers. As a result … sales declined, necessitating heavy discounts to sell excess inventory.”
The filing identifies 18 stores to start the closing process, and then another round of 700 more, including all Walmart shop-in-stores and Icing stores, but they’re expected to be added to the closing list as part of Claire’s liquidation agreement. The list includes 1,326 more locations that could be closed by October 31 unless Claire’s is able to find a buyer, which the CEO said, “it is unlikely that such a bidder will emerge.”
Claire’s has initially only announced 18 store locations that they’re closing within the month. However, sources on Reddit show that multiple stores have already been locked out or evicted due to not paying their June or July rent. According to Reddit users and a source in Springfield, OH, Claire’s is also closing multiple Ohio locations, liquidating their goods and selling their store fixtures.
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