On August 20th, the jewelry retailer Claire’s announced that it will sell its North American business to the private equity firm Ames Watson for $104 million in cash, a move that will allow at least 795 retail stores to be retained.
In a court filing submitted on Wednesday, Claire’s stated that the sale agreement will “help the Claire’s brand continue to maintain its position as a well-known retailer for global teenagers, tweens, and young girls.”
According to court documents, the private holding company Ames Watson, which owns sports apparel brands like Champion Teamwear and Lids, is acquiring the Claire’s brand and its up to 950 stores. Claire’s has halted all potential store liquidation sales, but those stores not being acquired will continue with clearance sales activities.
Claire’s primarily sells earrings and fashion accessories for teenagers and young girls. The company filed for bankruptcy earlier this month with debts exceeding $690 million. Claire’s had previously filed for bankruptcy protection and currently operates over 2,300 stores in 17 countries in North America and Europe.
Lawrence Berger, co-founder of Ames Watson, stated in a release that the company is “committed to investing in the future of Claire’s by preserving the vital retail business in North America.”
As part of the acquisition, Ames Watson will also provide non-cash considerations, such as assuming Claire’s suppliers and landlords’ debts, retaining existing retail employees in the acquired Claire’s stores, and offering a $36 million credit facility for the bankrupt company to repay some of its existing debts.
Claire’s will seek approval for this sale at a court hearing scheduled for Thursday in Wilmington, Delaware.
Claire’s last filed for bankruptcy in 2018 for similar reasons: unable to handle massive debts due to declining sales and a shift to online shopping. During the restructuring, Claire’s was able to eliminate $1.9 billion in debt and sustain store operations with the help of $575 million in new capital.
In recent years, Claire’s has faced intensified competition, high rents, and the impact of new tariffs on imported products from supply countries like China, Thailand, and Vietnam.
Neil Saunders, Managing Director at GlobalData, noted in a report, “Competition has intensified over the years, with retailers like Lovisa providing higher-end, more affordable products for young consumers. This better caters to the demands of young consumers, making Claire’s appear somewhat out of touch with modern consumer needs.”
(This article is adapted from related reports by Reuters.)