Claire’s shopping mall jewelry chain is headed for bankruptcy

The shopping center jewelry chain Claire’s Stores is reportedly in the process of switching to bankruptcy protection, in a bid to clean up its finances and reappear with a better future.

Claire’s, which also owns the Icing chain, fell victim to heavy acquired debt when private equity firm Apollo Global Management LLC orchestrated a $ 3.1 billion buyout in 2007.

Struggling malls, online competition and more nimble physical competitors have also proven to be problematic.

The channel is expected to file for bankruptcy “in the coming weeks,” Bloomberg reported, citing confidential sources. Claire’s had 3,291 stores worldwide as of October 28, including 653 franchise stores.

Representatives for Claire’s and Apollo were not immediately available for comment on Friday.

“Claire’s business is improving and generating more cash flow, but her level of debt needs to be reduced,” said Philip Emma, ​​analyst at industry restructuring information firm Debtwire, in an email.

The company has key interest payments due on March 15, potentially triggering the bankruptcy filing. In total, the company owes more than $ 2 billion.

Bloomberg said Apollo was negotiating a deal to cede control to lenders, including Elliott Capital Management and Monarch Capital.

It was well known that Claire was wavering. The company announced in January that it had hired investment banker Lazard “to assess a capital structure solution.”

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“The steps we take now with Lazard will help ensure Claire’s long-term success for years to come,” then CEO Ron Marshall said in a statement. “We believe now is the right time to undertake this initiative and we want to assure our suppliers, employees and stakeholders that we believe we have sufficient cash flow to meet our commitments throughout this process.

Excluding debt payments and other one-off factors, the company’s financial performance has remained decent. Adjusted earnings before interest, taxes, depreciation and amortization increased 14.8% to $ 42.4 million for the period.

Sales at stores open at least a year in Claire’s third quarter, the latest period available, increased 1.1%.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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