Claire's Stores Declares Bankruptcy
Claire’s Stores has become the latest retailer to go under as ever fewer people go to brick-and-mortar locations and more people shop online. Its other weakness has been that it competes with much larger retailers, many of which have similar inventory.
The company announced:
Claire’s Stores, Inc. announced that it is pursuing a financial restructuring in order to eliminate a substantial portion of debt from the Company’s balance sheet and position Claire’s for long-term success pursuant to a chapter 11 reorganization process commenced in the United States Bankruptcy Court for the District of Delaware by Claire’s and certain of its U.S. affiliates. Claire’s international subsidiaries are not part of the Company’s U.S. chapter 11 filings. The Company’s management is confident that, through the restructuring process, Claire’s will cement its position as one of the world’s leading specialty retailers of fashionable jewelry, accessories, and beauty products for young women, teens, “tweens” and kids for many years to come. Unlike other retailers that have come before it, Claire’s has commenced its restructuring process from a position of unique operational strength.
It is, therefore, not like the Chapter 11 filing made by Toys “R” Us, which had weak financials. The decision is merely to kill the company’s debt load, an argument that should be viewed with skepticism
The company reported:
- The Company expects to report adjusted EBITDA for F Y2017 (on a 52-week basis) of approximately $212 million, up nearly 13% from FY20 16.reconciliation of net income to adjusted EBITDA is included in this release.
- The Company expects to report an adjusted EBITDA margin for FY2017 (on a 52-week basis) of approximately 16.1%, up nearly 170 basis points from FY2016.
- The Company expects to report net sales and net income for FY2017 (on a 52-week basis) of approximately $1,318 million and $29 million, respectively.
- Claire’s is growing, not shrinking, its business. The Company expects its concessions business to grow by more than 4,000 stores in 2018.
- Claire’s continues to be the world’s leading ear piercer, having pierced over 100,000,000 ears worldwide, and approximately 3,500,000 ears in FY2017 in the United States alone. The Company’s iconic ear piercing services are unmatched and cannot be replicated online.
- The Company is utilizing the chapter 11 process to effectuate a balance sheet—not an operational—restructuring.