Times have changed in America. In a previous era, not too long ago, we used to go to malls and shop in stores; now, we can simply get our shopping done online. The traditional brick-and-mortar retailers are feeling the pain. According to CNN Money, another one is now showing clear signs of decline. Claire’s, a once-successful chain that dealt in fashion accessories and ear piercings, is now filing for Chapter 11 bankruptcy.
Claire’s leadership insists that this isn’t the end for the company—it’s merely a bridge to a new stage in its history. Claire’s isn’t folding; it’s merely making a restructuring agreement with its creditors to cut down on debts. The company reportedly had $2.1 billion in debt as of the end of 2017 and is looking to reduce its debt by $1.9 billion.
“This transaction substantially reduces the debt on our balance sheet,” Claire’s CEO Ron Marshall told CNN. “We will complete this process as a healthier, more profitable company.”
Claire’s has pierced over 100 million ears worldwide since its inception, but it’s been in rough financial shape for the last decade. The company made a major deal in 2007 with Apollo Management, a private equity firm, which bought the Claire’s brand for $3.1 billion in a leveraged buyout, but the company still wasn’t able to escape from debt.
Now, Marshall’s leadership team is taking more concrete steps to stabilize the business. The plan is to keep operating approximately 1,600 Claire’s stores in the U.S. during the bankruptcy process; additionally, international stores will keep operating as normal since they’re not part of the restructuring deal.
In the brick-and-mortar shopping business, Claire’s is far from alone in its story of 21st century decline, as a litany of retailers have filed for bankruptcy in recent years. Most notably, Toys “R” Us announced recently that it will be liquidating its 735 stores in the United States. Payless Shoes, Gymboree, Rue21, The Limited and RadioShack are among the others that have suffered a similar fate.
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