Teen retailer Claire's declares bankruptcy for a second time within a seven-year period.
Claire's Stores Inc., a long-standing teen retailer, has filed for Chapter 11 bankruptcy protection in a federal court in Delaware. The move comes as the company grapples with increased competition, the shift towards e-commerce, heavy debt obligations, economic pressures, and tariff-related cost increases.
The decline of mall shopping, a sector in which Claire's is heavily invested, has significantly reduced in-person sales. The rise of online shopping, while affecting many retailers, has been particularly challenging for Claire's, as its customer base—mostly young individuals—rely on tactile experiences in-store. Despite efforts to develop an e-commerce business, Claire's own online platform has been unprofitable, losing approximately $9 million in adjusted EBITDA in 2024.
Claire's import costs have also risen due to increased tariffs, as about 75% of its inventory is sourced from China. This has led to an estimated $30 million increase in the cost of goods sold, significantly squeezing margins.
The company's financial strain is further compounded by prior bankruptcies and heavy debt, combined with inflation and higher operational costs. This has limited Claire's ability to recover.
In an effort to avoid complete liquidation, Claire's is seeking buyers for its remaining 800 stores. If a buyer is not found, the company faces the risk of total closure.
Claire's operates under two brand names: Claire's and ICING. It has a significant presence in the Middle East and South Africa through franchised stores, in addition to its primary operations in North America and Europe. The company currently operates more than 2,750 stores in 17 countries.
Claire's Stores Inc. has also been trying to go public, with a filing in 2021, but withdrew IPO plans in June 2023. The company is primarily owned by Elliott Management and Monarch Alternative Capital, who took control of the retailer when it emerged from its first bankruptcy in 2018.
The number of US retail store closures has reached its highest level since the pandemic, with Claire's being one of the latest casualties. The company has not yet filed a document outlining its proposed path in bankruptcy.
In a bid to navigate this challenging period, Claire's has engaged Houlihan Lokey Inc. to find potential buyers for some or all of its locations. The case serves as a reminder of the challenges traditional specialty retailers face amid changing consumer behavior and macroeconomic headwinds.
[1] "Claire's Files for Bankruptcy, Plans to Close About 1,100 Stores." CNBC, 26 Aug. 2025. Web. 26 Aug. 2025. [2] "Claire's Stores Inc. Files for Bankruptcy Amid Heavy Debt, Tariff Costs." The Wall Street Journal, 26 Aug. 2025. Web. 26 Aug. 2025.
- Claire's Stores Inc., a major retailer, has filed for Chapter 11 bankruptcy protection, citing increased competition, the shift towards e-commerce, heavy debt obligations, economic pressures, and tariff-related cost increases as primary reasons.
- Despite their efforts to develop an e-commerce business and reduce reliance on in-person sales, Claire's own online platform has been unprofitable, losing an estimated $9 million in adjusted EBITDA in 2024.
- Claire's is attempting to avoid complete liquidation by seeking buyers for its remaining 800 stores, but faces the risk of total closure if a buyer is not found.
- The company's financial woes are further aggravated by prior bankruptcies, heavy debt, inflation, and higher operational costs, which have limited its ability to recover.
- As part of a bid to navigate this challenging period, Claire's has enlisted Houlihan Lokey Inc. to find potential buyers for some or all of its locations, highlighting the difficulty traditional specialty retailers face due to changing consumer behavior and macroeconomic headwinds.
