From bounce-back to bankruptcy: Inside Claire’s renewed financial struggles

After weeks of speculation, Claire’s has finally filed for bankruptcy protection in the US. For the teen accessories retailer, this marks the second descent into bankruptcy in seven years, with this latest filing heightening fears over what is to come for its international network of stores. How did Claire’s come to such a predicament? Let’s find out.

First run-in with bankruptcy

In March 2018, Claire’s filed for Chapter 11 bankruptcy protection in a Delaware court. At the time, the company was owned by private equity firm Apollo Global Management, which bought it in 2007 for a substantial 3.1 billion dollar sum. Claire’s was facing unmanageable levels of debt, of which it was able to eliminate 1.9 billion dollars thanks to a court-backed restructuring strategy. The retailer also blamed declining mall traffic and intense market competition for its downfall.

During the process, Claire’s stores were able to continue operating through new capital valued at 575 million dollars and supported by a group of first-lien creditors, led by Elliott Management Corporation and Monarch Alternative Capital LP. After a legal back and forth over who was to own the chain, these creditors were eventually handed control of Claire’s and continued to oversee its bankruptcy proceedings, from which it later emerged in October.

The years that followed

The years that followed were all about recovery. Things were looking up when the retailer reported that sales had nearly doubled year-over-year in the first half of 2021, during which time it also swung to a profit after previously posting losses. By the end of the year, the company’s management had said they planned to invest over 150 million dollars into the business, with new store formats, e-commerce expansion, a refreshed brand identity and subscription service among the shifts being made.

In both 2022 and 2023, Claire’s continued expansion plans. In the US, it worked with department store giants like Macy’s on rolling out in-store concessions, a strategy that mirrored efforts in the UK, where it debuted in select locations of supermarket chain Asda. Elsewhere, it was widening its breadth in relatively fresh markets. In Europe, Claire’s outlined a widespread expansion strategy, building on its already 900 owned stores and expansive reach of partner retailer locations across the region. New markets were also being eyed, namely Mexico, where Claire’s opened its first regional store at the end of 2023.

Despite what appeared to be a positive turnaround, there were signs of underlying trouble. On the back of a more upbeat trajectory, Claire’s announced plans to file for an IPO in late 2021, after previously failing to go public in 2013. At the time, the company confirmed that its current owners, the aforementioned creditors, would still hold significant interest in the retailer. Yet, while the IPO filing nodded towards a potential operational turnaround, a 2022 report suggested there were still struggles ahead, particularly in the aftermath of the Covid-19 pandemic, for which temporary store closures impacted income. By 2023, Claire’s abandoned its IPO plans, citing conditions in the public equity market – activity for which dropped in 2022 – as the driving force behind the decision.

Another chapter of financial struggle

During this time, the retailer was also facing a 496 million dollar long-term debt, due December 2026. It was exactly this that led to speculation over Claire’s eyeing either a sale of the business or a Chapter 11 filing in June 2025, with media outlets also suggesting that the company was skipping rent payments. This time, next to rising debt and low store traffic – the causes of its prior bankruptcy – Claire’s is now also facing challenges from President Trump’s tariffs, which are raising import costs for US companies.

Meanwhile, in France, the company’s local subsidiary was placed into receivership – a formal insolvency proceeding similar to bankruptcy in the US or administration in the UK. While a recovery plan is currently being drawn up, a lawyer representing French staff has questioned the lack of clarity in the French financial disclosures of Claire’s. The subsidiary had posted a net profit of 1.3 million years in the year ended 2024, however, revenue fell from 142 million to 132 million euros over the same period.

Its UK arm is also at risk of a sale, with reports circulating in June stating that advisors at Interpath had been appointed to oversee a rescue plan. While the company is yet to comment on proceedings in the region, the Telegraph suggested that restructuring experts were seeking out investors willing to rescue either all or part of the British operations. This in turn has fuelled speculation that Claire’s may end up enacting a geographical break up of its business. The latest news from the US has escalated fears that its 300 UK stores could be due to close, potentially resulting in thousands of job losses. The retailer is struggling to find a buyer for its UK arm, and possible bidders are said to have backed away following its collapse in the US, according to Sky News.

Details of the US Chapter 11 proceedings have now become known to the public. The bankruptcy pertains to the company’s US operations and several of its subsidiaries operating as part of the Claire’s and Icing brands. In a statement, Chris Cramer, CEO of Claire’s, called the decision to file “difficult” and cited “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” as primary drivers. Elliott Management is said to be its largest shareholder, with a stake of 39.61 percent.

According to documents filed with a Delaware court, Claire’s employs around 7,000 people across the US within 1,350 stores. These are expected to remain open as the company explores strategic options. If no deal materialises, however, stores will be shuttered by October 31 as part of a liquidation agreement. Its debt load, meanwhile, sits between 1 and 10 billion dollars, and it is now due to repay 600 million dollars in 2026.

In Canada, cross-border US-affiliated stores also intend to commence proceedings under the Companies’ Creditors Arrangement Act, which will protect much of its Canadian operations from evictions and creditor actions as a recovery or sale is explored. To ensure the continuation of its operations in the US and Canada, Claire’s said it is seeking approval for a “consensual use of cash collateral”.

About Claire’s

Claire’s was founded in 1961 under the name Fashion Tress Industries, a wig retailer that began its operations in Chicago. It only became Claire’s in 1973, when it acquired the small jewellery chain Claire’s Boutique, and later shifted its focus to teen girls and expanded into US malls. The company established itself into a cultural staple, known for its low-cost accessories and in-store ear piercing services, an identity that helped to launch it into new international markets. In 1996, the retailer acquired The Icing, a brand that targeted older teens and women, expanding its reach.

According to its website, Claire’s now operates a total of over 2,750 stores across 17 countries, and owns 190 Icing stores in North America. It also has over 300 franchised stores in the Middle East and South Africa and sells its products via thousands of global concessions and department stores.