Claire’s accessories has filed for bankruptcy in the US and entered administration in France, stoking fears about its presence on UK high streets.
The US-based fashion accessories and jewellery business filed for Chapter 11 bankruptcy in a court in Delaware, according to new documents.
Chris Cramer, CEO of Claire’s, said the decision was “difficult” but “necessary”.
“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,” Cramer said.
The company’s French subsidiary entered judicial recovery at the end of July.
The company has faced bankruptcy before – in 2018, Elliot Management and Monarch Alternative Capital gained control of its stores as former creditors.
A significant turnaround has been halted by rivalry from companies such as Amazon, which have capitalised on the cheaper products from China, leading to a slowing in-store consumption and cost pressures.
Claire’s runs 2,750 stores across 17 countries. It has around 280 stores in the UK.
The new bankruptcy filings show liabilities and assets of between $1bn (£750m) to $10bn, according to PA, with money owed to more than 25,000 creditors.
Last month, Bloomberg reported that Claire’s had instigated a search for a future buyer, but it has reportedly struggled to land a bid.
Cramer said: “We remain in active discussions with potential strategic and financial partners and are committed to completing our review of strategic alternatives.”
“I’d like to express my gratitude for our employees, who have continued to work diligently in a constantly evolving consumer landscape to deliver amazing products and experiences for our customers. We remain committed to serving our customers and partnering with our vendors and landlords in other regions during this time.”
Claire’s struggles to find a buyer
A filing for administration in the UK is regarded as increasingly possible this month, according to Sky News.
Claire’s is not the only mid-market retailer to be squeezed by competition, with River Island facing a crucial vote this Thursday on its restructuring package.
If the package fails to be approved by the High Court, River Island will be forced to enter administration.
High-street peers like Miss Selfridge, Dorothy Perkins and Debenhams have already disappeared and become online-only.
RBC analysts have described it as a “hollowing out” of the mid-market in retail.
“Younger people are just less interested in bricks and mortar, going into a shop and trying things on, because [online shopping] is so handy,” Michelle Quinn, partner at Grosvenor Law, said.
“The High Street is really suffering, there are… great swathes of empty premises across the high street,” Quinn said.